Govna

I’m turning 55 this year, which is the earliest I can withdraw from my UK pension fund (private, not state). Planning on taking it all in one go, putting it into an online brokerage and using an option strategy to generate income.

Looks like it’ll be taxed by the UK and US governments. How beat to minimize the taxes?

durham_lad

I was never taxed on my private UK pension while I was living in the USA. I completed a form with the IRS who notified HMRC that I was tax resident in the USA. That was over 10 years ago but I expect someone wil confirm that is still the case.

John123456

I know it might not be exactly on topic, but I will try to ask anyway.
Is it very compliacted to transfer your SIPP pension funds over to the US, when you emigrate there?

durham_lad

I think it is impossible. It is the same when going back, the US equivalent of a SIPP, such as a 401k or IRA cannot be moved without cashing it in first.

I simply kept my UK pension provider up to date with my changes of address in the USA (6 different US addresses over 30 years). On returning to the UK I keep my US pension providers (3 of them) up to date with my UK addresses and manage my US IRAs from the UK.

MidAtlantic

It is still the same.

The form is DT US Individual 2002: https://assets.publishing.service.go...idual_2002.pdf and these are the notes: https://assets.publishing.service.go...-Ind-Notes.pdf

durham_lad

Perfect - thanks for that.

Glasgow Girl

It can be done. I transferred several private pensions a couple of years ago. For small pots, less than 30,000 pounds it is pretty easy, just contact the SIPP that you want to transfer to and they will guide you through the process. For pots larger than 30,000 pounds you are legally required to have professional financial advice from a certified UK IFA and that is where it gets hard. For a variety of reasons, mostly related to liability, there are very, very few UK IFAs certified to perform this task that will work with anyone resident in the USA. Those that do will require you to transfer to a managed SIPP, however once you have released the funds from your pension provider you can then transfer from the managed SIPP to a self managed option like AJ Bell.

If you can it will an order of magnitude easier to do this before you move to the USA.

Glasgow Girl

As others stated you can avoid UK taxes but you still have to pay US taxes. You could transfer to a SIPP and then withdraw funds each year to optimize your tax situation, meaning that you could withdraw as much as you can annually before you hit a new tax threshold such as a higher income tax rate, a higher Capital Gains rate, the Obamacare Net Tax, the higher threshold for paying Medicare premiums, etc. if you take it all at once, unless it is a very small pot, you will likely trigger a lot of those thresholds and end up paying quite a lot of additional unanticipated taxes.

MidAtlantic

I think you are misunderstanding. The question is transfer of a SIPP to the USA.

miv

How did your plan work out?
Planning on taking it all in one go, putting it into an online brokerage and using an option strategy to generate income.
thanks for any advice.

nun

The OP's plan will result in tax being due in both the US and the UK because it is a lump sum payment ie a single payment of the entire balance and is covered by Article 17.2 This gives the UK the right to tax the payment and because it is included in the savings clause the US can tax it as well if the OP is a US citizen or tax resident.

FYI it is also impossible to transfer a UK pension plan, SIPP et, to the US and maintain the tax wrapper. Of course after the pension money is "crystalized" the money can be moved easily.