Wirksworth

I would be interested to know where this matter ended up for britess ? I am trying to decided whether to transfer a DB pension to a SIPP and am concerned about possible foreign trust issues - can anyone recommend a US Tax advisor who is well versed in this area.
Thanks

Cook_County

The IRS are currently litigating against an individual who it is rumoured took doubtful advise on the US tax implications of Australian superannuation. The moral of this story to my mind is to be cautious in US reporting in relation to SIPPs. https://www.afr.com/companies/financial-services/alan-dixon-takes-extended-leave-from-us-masters-property-fund-20190801-p52csa?fbclid=IwAR2Iw8NAnQZBbWsnTfzfgRD2_MxsXfDXmh Vrt2gYSLnkTOSmgJR6sbpyizw

Wirksworth

Thanks Cook County- The Australian situation is different as the Tax Treaty is not as good as it is between the UK and USA. Also shady advisors out there will propose transfers into places which cause trouble with the IRS.

That said having discussed SIPP's with a Top 4 Accountancy firm they advised:

A SIPP is a grantor trust so they file form 3250 but declare none of the portfolio gain and file form 8833 as well

They view the 25% Tax free in UK lump sum as taxable in the USA

A transfer from a UK DB pension to a UK SIPP is not a distribution and therefore has no UK or US tax consequences ( This is clearly stated in the Tax treaty but as I had an expert on the call no harm in asking)

Unfortunately to have this position in writing comes with a £5K fee so I only have it verbally but kind of them to give me this.

If anyone else files form 3520 I would be interested to learn how it is filled in and also what they put on form 8833.

An Expat focused CPA in the USA takes a view that whilst technically a SIPP is a grantor trust he doesn't file the 3520 form.

It would be interesting to know what % of USA based people with a UK SIPP file form 3520 ?

dee98

I had a question I hope you don't mind me asking in this topic. I tried searching the forum but could not find a similar scenario.

If a UK employer changes their UK workplace pension provider and then automatically transferred all of their employees funds to the new pension provider from a US tax stance point does this have any signifacance to US taxes or would you just continue reporting the pension as normal on the 8938/FBAR (when thresholds are met) as going forward, no additional paperwork required?

Wirksworth

Hi,
The UK- USA Tax treaty specifically states that a transfer from one approved pension scheme to another approved pension scheme is NOT a distribution so there are no IRS / Tax consequences of your employer changing provider.

dee98

Thanks, I was just making sure that it wouldn't of resulted in any other additional paperwork regarding taxes other than the 8938/ FBAR. The transfer was automatically done by the employer due to them changing their pension provider the employees had no involvement other than being notified that this change was occurring.

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durham_lad

I agree, just change the name next time you do a filing. It has happened to me.

dee98

Thanks durhamlad, I just wanted to make sure it didn't trigger any extra paperwork or that but yeah it makes sense it is just a administrative change carried out by the employer not the pension holder. It just moved pension provider and is still the workplace pension for this employer.

I'll update the name etc on future 8938 and FBARs when thresholds are met.