Transferring UK pension to US 401K!
#16
BE Forum Addict
Joined: Mar 2008
Location: Santa Cruz, CA
Posts: 4,913
Re: Successfully transferring UK pension to US 401K??
Their is no reasonable explanation why a UK Ex Pat should not be able to transfer their Pension Investments. The Inland Revenue will allow it tax free but the IRS puts up an illogical barrier by saying UK Pensions Investments do not qualify.Yet investments in a 401k are made exactly the same as into a British Pension.
The annual amount that can be contributed to a 401K plan is limited, the contributions are tax deferred and come from earned income and distributions from the plan are treated as taxable income. Those rules do not allow for the possibility of injecting a lump sum from a foreign pension scheme into a 401K nor do they cover the issue of who should collect the taxes on distributions related to that lump sum.
I would like the British Ex Pat web site to organize a petition on our behalf.
#17
Just Joined
Joined: Feb 2012
Posts: 8
Re: Transferring UK pension to US 401K!
So is the amount you can put into a UK Pension from income, and the tax is also deferred, I do not see where you are coming from. The UK see fit to allow a transfer, this is nothing more than an oversight that the IRS cannot be bothered to change. I spoke with an attorney in Washington that is responsible for writing tax law for the IRS and she could so no reason for the exemption.
Another example of bureaucracy working against the average citizen. As for a petition it seems to me that this site having a data base of ex pats would be the ideal platform for raising a petition despite what you think.
Another example of bureaucracy working against the average citizen. As for a petition it seems to me that this site having a data base of ex pats would be the ideal platform for raising a petition despite what you think.
#18
BE Forum Addict
Joined: Mar 2008
Location: Santa Cruz, CA
Posts: 4,913
Re: Transferring UK pension to US 401K!
So, yes, of course the US could craft legislation to allow this to be done for UK pension schemes (and French and German and Italian and Canadian and Mexican and Australian pension schemes ...) they just haven't chosen to do so
As for a petition it seems to me that this site having a data base of ex pats would be the ideal platform for raising a petition despite what you think.
You didn't say "I am going to organize a petition about this", you said:
I would like the British Ex Pat web site to organize a petition on our behalf.
#20
Just Joined
Joined: Dec 2012
Posts: 1
Re: Transferring UK pension to US 401K!
I am also trying to successfully transfer UK pension funds into a QROPS registered fund in the US with no luck. I would like to move the money from the UK pension to a US-based IRA or 401(k) in order to eventually stop having to file tax returns in both the US and UK. I assume when my UK pension starts paying out I would have to start filing in both countries again. Does anyone know if that is the case? Thanks, Paul
#21
Re: Transferring UK pension to US 401K!
I am also trying to successfully transfer UK pension funds into a QROPS registered fund in the US with no luck. I would like to move the money from the UK pension to a US-based IRA or 401(k) in order to eventually stop having to file tax returns in both the US and UK. I assume when my UK pension starts paying out I would have to start filing in both countries again. Does anyone know if that is the case? Thanks, Paul
If you are a US resident all gains in UK pension funds are US and UK tax deferred and you won't have to pay UK tax on payments from a UK based pension. Also the only UK tax form you have to file is a US-Individual-2002 which confirms your US residency and the UK tax free status of you pension payments.
Last edited by nun; Dec 18th 2012 at 11:46 am.
#22
Re: Transferring UK pension to US 401K!
I am also trying to successfully transfer UK pension funds into a QROPS registered fund in the US with no luck. I would like to move the money from the UK pension to a US-based IRA or 401(k) in order to eventually stop having to file tax returns in both the US and UK. I assume when my UK pension starts paying out I would have to start filing in both countries again. Does anyone know if that is the case? Thanks, Paul
At the end of 2011 I converted a personal pension fund in UK to an Annuity there.
This year (2012) I converted an additional 2 personal pension funds in UK to Annuities.
I also began receiving payments from my UK State Pension.
As I am RESIDENT in US (and not UK) I was not required to file any tax forms there either last year or going forward. NONE!
There are no QROPS registered funds in the US. It is NOT possible to transfer UK retirement funds into US based retirement funds. If you are a US resident all gains in UK pension funds are US and UK tax deferred and you won't have to pay UK tax on payments from a UK based pension. Also the only UK tax form you have to file is a US-Individual-2002 which confirms your US residency and the UK tax free status of you pension payments.
1) I, too, looked into QROPS. Yes...."when there's a will, there's a way"....except when there isn't!
And there isn't!
2) I just filed my US-Individual-2002 (fyi: This is a form which ultimately gets filed with HMRC - but via the US Dept. of Treasury. They require that you mail or fax it to them together with IRS form 8802 and proof of payment of the $85 fee for their Certification to HMRC that you are a US Resident (and therefore not liable for any taxation in UK)
In summary - yes, this is mind-numbingly crazy making
But hey....grin 'n bear it .....because....
.....well because that's just the way it is!
Last edited by MMcD; Dec 18th 2012 at 1:44 pm.
#23
Re: Transferring UK pension to US 401K!
I know (from my own direct, personal experience) that that's definitely NOT the case!:
At the end of 2011 I converted a personal pension fund in UK to an Annuity there.
This year (2012) I converted an additional 2 personal pension funds in UK to Annuities.
I also began receiving payments from my UK State Pension.
As I am RESIDENT in US (and not UK) I was not required to file any tax forms there either last year or going forward. NONE!
At the end of 2011 I converted a personal pension fund in UK to an Annuity there.
This year (2012) I converted an additional 2 personal pension funds in UK to Annuities.
I also began receiving payments from my UK State Pension.
As I am RESIDENT in US (and not UK) I was not required to file any tax forms there either last year or going forward. NONE!
#24
BE Enthusiast
Joined: Nov 2012
Posts: 902
Re: Transferring UK pension to US 401K!
The tricky part is now that the IRS will be told about the personal pension on Form 8938 and it is impossible to fill the form in withiut identifying it as a foreign trust.
#25
Re: Transferring UK pension to US 401K!
Whether 8938 is required will depend on the value of the pension, but anyone with a UK pension should already be dealing with it appropriately for US tax purposes. That might be ensuring that a treaty position is appropriate or using UK tax credits to cover US tax on any gains absent the treaty to build up a US tax free basis......the second strategy is most advantageous if you retire in the US.
#27
Re: Transferring UK pension to US 401K!
UK retirement accounts do not have tax deferred status under IRS regulations. However, the US/UK tax treaty allows certain UK pensions to grow tax free until income is taken. US citizens and residents should determine how their UK pension funds are covered by the treaty and also understand how they are taxed if they are no covered. If they at not covered foreign trust and PFIC will probably be applicable. Professionals often disagree about the exact status of UK retirement finds like SIPPs, but final salary pensions while he covered by treaty.
#29
Just Joined
Joined: Sep 2010
Posts: 11
Re: Transferring UK pension to US 401K!
Try this: A list of 2013 HMRC approved QROPS...
http://www.hmrc.gov.uk/pensionschemes/qrops.pdf
I don't know what the procedure is for transferring, but at least it shows there are approved schemes in the USA.
http://www.hmrc.gov.uk/pensionschemes/qrops.pdf
I don't know what the procedure is for transferring, but at least it shows there are approved schemes in the USA.