I have approx $210,000 in a US company 401k scheme. I am almost 72 years old and a UK National and resident. I previously worked in the USA under a Green Card.
I retired in 1996 and surrendered my Green Card and now live in the UK on a permenent basis. I am married and my wife is almost 67 years old.
I am now receiving an annual cumpulsary distribution of 1/27 of the total 401k investment. This I can elect to have paid to me with no withholding and as I am a uk resident would not be subject to US tax but will be suject to UK tax as Income.
This would be fine if I had only myself to think of but I understand that when I die, by the rules of my company's 401k the remaining balance of my 401 account will be paid in full to my widow.
My questions
1 Will this be treated as income for her in that year.
2 Is there a way to avoid this Tax
3 Is there a way I could liquidate this account say over a 4 year period and minimise the Tax as under the existing US/UK Treaty
4 What would the level of US tax be if I were to withraw $50,000 per year.(I am currently receiving a US company pension and US Social Security Pension) currently not taxable in the US under the treaty.
Any help would be greatly appreciated, professional UK/USA expertise seems mighty scarce over here

1) Yes, if she took the entire distribution in one year, it would be treated and taxed as income received in that year.

2) It can be mitigated if you roll the 401K into a rollover IRA immediately. You would still have the same annual distribution requirement, but, by making your wife the beneficiary, she can then choose to take the distribution from the inherited IRA over time rather than all in one year, using HER age as the acturial basis.

3) Not if you exceed the maximum specified by the treaty.

4) I would need to know your complete income situation to make a determination.