Question on Inheritance Tax
Feb 25th 2020, 8:56 am
#1
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Question on Inheritance Tax
This month's Which? had an article on Inheritance Tax (IHT) and it said that money in Defined Contribution accounts did not count towards the nil-band rate for IHT. Their advice is to draw down income from other savings first, leaving the DC money alone, if you can afford it. When you die the money in that DC pension pot will pass to your heirs without any consideration of all or part of it being subject to the 40% IHT.
My question is does this apply to a DC plan from a another company? My wife and I both contributed for many years to our company's DC plan while working in the USA. (for us it was a 401k plan).
My question is does this apply to a DC plan from a another company? My wife and I both contributed for many years to our company's DC plan while working in the USA. (for us it was a 401k plan).
Feb 26th 2020, 6:38 pm
#2
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Re: Question on Inheritance Tax
UK pension scheme Nomination Forms are written as an Expression of Wishes for consideration by the Trustees or similar.
According to the link below about Tax on a private pension you inherit:
According to the link below about Tax on a private pension you inherit:
"You do not usually pay Inheritance Tax on a lump sum because payment is usually ‘discretionary’ - this means the pension provider can choose whether to pay it to you.
Ask the pension provider if payment of the lump sum was discretionary. If it was not, you may have to pay Inheritance Tax."
https://www.gov.uk/tax-on-pension-death-benefits
A 401k plan Beneficiary Designation for Death Benefits Form looks like an instruction with wording such as "I designate as my primary beneficiary ...". In this case I guess that a 401K is inside an estate for UK IHT.Ask the pension provider if payment of the lump sum was discretionary. If it was not, you may have to pay Inheritance Tax."
https://www.gov.uk/tax-on-pension-death-benefits
Feb 26th 2020, 7:11 pm
#3
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Re: Question on Inheritance Tax
UK pension scheme Nomination Forms are written as an Expression of Wishes for consideration by the Trustees or similar.
According to the link below about Tax on a private pension you inherit:
According to the link below about Tax on a private pension you inherit:
"You do not usually pay Inheritance Tax on a lump sum because payment is usually ‘discretionary’ - this means the pension provider can choose whether to pay it to you.
Ask the pension provider if payment of the lump sum was discretionary. If it was not, you may have to pay Inheritance Tax."
https://www.gov.uk/tax-on-pension-death-benefits
A 401k plan Beneficiary Designation for Death Benefits Form looks like an instruction with wording such as "I designate as my primary beneficiary ...". In this case I guess that a 401K is inside an estate for UK IHT.Ask the pension provider if payment of the lump sum was discretionary. If it was not, you may have to pay Inheritance Tax."
https://www.gov.uk/tax-on-pension-death-benefits
Lots of rumors on IHT being overhauled in the next budget so the question may become irrelevant anyway.
