Muswell Hill

As part of the new UKBA spousal visa requirements I have a question about cash savings requirements I hope you can help with please?

In section 7.2.4. of Annex FM Section FM 1.7: Financial Requirement, It says: For example, in the UK a "stocks and shares‟ Individual Savings Account (ISA) does meet the definition of a savings account and the funds can be considered as cash savings if all the requirements above are met. Likewise, a pension savings account from which savings can be immediately withdrawn (like the 401K in the US).

I have an IRA and a 403b retirement account, like a 401k but for non-profit employers (like Universities).

Will the UKBA accept funds in an American IRA or 403b as proof of savings? Has anyone had any experience with this?

Cheers,
MH

ExpatRaz

Yes they will as long as the investment is in your name or your spouse name. you will need to transfer the investment in a cash saving account or a current account or have immediate access to the funds. hope this helps. :-)

Speedwell

Yes, they will; you need to be fully vested in a 401K and the account needs to be in your own name and to have been in your own name for six months. My employer keeps my 401K account under their name, curse them, even though I am fully vested, so my Merrill Lynch rep says I have to quit my job to take control of the money. I can roll it over immediately into an IRA at that point, though, so I do not take early withdrawal penalties. When considering the qualifying amount for immigration, you specifically do not have to calculate penalties for taking out the money, by the way.

I am not clear on one point, maybe someone can answer this for me? If I am the US spouse and I have a 401K as above, and I quit my job and transfer the money to an IRA in my own name only and wait the six months, can my UK husband then use that money as shared marital assets to satisfy the financial requirement, or must he actually have his name on it? I have no clue how you'd set up an IRA that isn't "individual".

englishguygoinghome

Small note - the savings can be in the name of the British Citizen (sponsor), the foreign spouse (applicant) or joint names of both. This is different to the rules for earnings

Muswell Hill

Thanks for all of the posts. What I really want to get to is whether the UKBA understand the very subtle difference between a 403B (which I have) and a 401k? To all intents and purposes they are identical (a few differences) under US tax law, with 401k's being offered by private for-profit companies and 403b's offered by not-for-profit companies. Given most Americans don't really understand the differences I was curious if anyone had experience with UKBA and 403b's or IRA accounts? Both can be withdrawn immediately albeit with a tax penalty.

I could cash them out and stick the money in my barclays account, but I don't want to because of the US tax implications.

Speedwell

The letter of the law is that a retirement account "such as a 401-K" is acceptable. If you attach a cover letter explaining that the 403-B is the equivalent of an 401-K for nonprofits, I think they will know what to do. I'm neither an accountant nor a lawyer, but I know the law does not say that only certain investment accounts of the type are acceptable. You do not have to cash them out, but you do need to have control of the money; that's why I can't use my 401-K as assets, because the company currently controls the account "on my behalf".

Speedwell

Thank you, that's quite clear and I appreciate you making that plain.

MrMuffin

Can someone clarify as there seems to be conflicting info here.

1. If the sponsor and/or applicant has a 401K account in their own name from a previous employer, then these accounts can be used as part of the savings requirement as is... or do they actually need to be cashed out first?

2. Is it enough to get a statement (on their letterhead) from the investment company and also show details of any prepayment penalties (and taxes) that would be deducted at time of EARLY withdrawal (to turn the 401K into cash)?

Thanks.

Speedwell

I talked to a fairly senior Merrill Lynch representative and looked at the law, and it is clear that the 401-K does NOT have to be "cashed out" first. The law even says that early withdrawal penalties do not need to be taken into account when claiming the account as an asset; so say you have 85K in the account and it would be worth 62K after penalties--you can claim 85K as the asset. The only constraint is that you have to own the account; it cannot be owned by the company for you (as mine is). That's why the Merrill Lynch advisor told me that I would have to turn around and sock the money immediately into an IRA after leaving my company. Then I'd have to hold it for a further 6 months to satisfy the part of the law that says you have to have the asset for that long.

MrMuffin

If this is truly the case, this is great to know and we're further ahead of the game than previously thought. My USC wife and I both have 401Ks from previous employers that we have full control of and are fully vested too. Even better that we don't have to take prepayment penalties into account. Thanks!!