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Help needed - company pension in UK, getting it to the US

Help needed - company pension in UK, getting it to the US

Old Aug 16th 2019, 4:08 am
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Default Help needed - company pension in UK, getting it to the US

I’m sure this has probably been asked multiple times but time is against me. I’ve got an old company pension in the UK. To me it’s not an insignificant amount. I’d forgotten I had it until a couple of months back and almost fell off my chair when I saw what the transfer value was. I contacted one of the many companies out there. I told the guy what the value was and we went from there and I thought it was going forward, a few weeks later he came back to me and said they were unable to assist as it was below the amount they work with. If they really worked with company pensions that would be impossible. I don’t know where to turn. I’ve got three weeks left before I’m at the end of the transfer period. Can anyone offer any advice?


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Old Aug 16th 2019, 7:37 am
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Default Re: Help needed - company pension in UK, getting it to the US

Has the pension plan been declared to the IRS each year on an 8938? Is it required to be disclosed on an FBAR? Sounds as if there is some US focused paperwork to be catching up with...
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Old Aug 16th 2019, 9:19 am
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Default Re: Help needed - company pension in UK, getting it to the US

If you are over 55 I would just cash it in, transfer the money over here and invest in $ in whatever you want to, or spend it. Saves a lot of hassle and paperwork. If you are under 55 you could look at A J Bell, they will do a Self Invested Personal Plan, SIPP, for US residents who have an existing UK pension. I don't have one myself as I am just going to cash my pensions in and be done with them, but several others on this forum have them. Perhaps they will chime in later. In any case just Google "A J Bell, SIPP, non resident" and go from there.

On the three week deadline, if it is a normal UK pension then the quote for the transfer value may be about to expire but they should still allow you to transfer it out after that date, you just wont be guaranteed the same value on the quote. It could be more or less depending upon market conditions. They will transfer whatever it is worth at the time of the transfer. They usually allow you to get another quote 12 months later, so you can always try again then. My advice would be to get it done as soon as you can and be done with it. Market movements and currency rate fluctuations will mean that is never an exact science.
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Old Aug 16th 2019, 10:26 am
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Default Re: Help needed - company pension in UK, getting it to the US

Thanks for the reply, that’s the issue, I’ve just turned 57 if I cash it in the UK side are going to want their pound of flesh and Uncle Sam is going to class is as income coming over. In theory once that happens it’s going to be worth less than 50% of the current value.
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Old Aug 16th 2019, 10:38 am
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Default Re: Help needed - company pension in UK, getting it to the US

No, not declared on any tax form. I had gone into a company pension plan back in about ‘87 and didn’t think any more about it. They transferred me out here in ‘93. I got a letter from them in around 2007 that they were thinking about getting out of the company pensions business and offered a bonus to move it but I only had a weeks notice and couldn’t do a thing in that time so I told them I didn’t care about the carrot of the bonus and leave it where it was which was an option and I forgot all about it again until I came across some paperwork..To me it’s just my pension that I’d forgotten all about but now it’s become a nightmare. No accountant doing my taxes since 1993 had ever asked if I had a pension in the UK, after the first 10 years of being here seeing that I always said no to having any foreign savings as they always called it stocks and shares and savings accounts, they stopped asking. My new accountant is an ex IRS agent I’m going to go in and see him this morning re any immediate tax implications but that still doesn’t help my situation about what on earth to do now although I really do appreciate the heads up.

A thought, while I had forgotten all about the pension, originally when I moved here I honestly gave it no thought at all as it was just a pension but I’ve never received any paperwork about it after the letter from the company offering me the option to move it. They had my address. From 2007-2012 I lived at that same address and didn’t get a thing. When I remembered about it I went to the govt site to look for the plan, found the original plan and found it archived, I called the correct govt department and was told that hopefully I’d be able to find my pension..... I was but no thanks to them. When I found who had it, it was a huge relief. But my address would have been the same one as 2007. This thing has grown surely something at some time should have been coming out or are these things just left to sit there?

Last edited by britess; Aug 16th 2019 at 11:08 am.
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Old Aug 16th 2019, 11:34 am
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Default Re: Help needed - company pension in UK, getting it to the US

Originally Posted by britess View Post
Thanks for the reply, that’s the issue, I’ve just turned 57 if I cash it in the UK side are going to want their pound of flesh and Uncle Sam is going to class is as income coming over. In theory once that happens it’s going to be worth less than 50% of the current value.
Assuming you take a lump-sum distribution taxation by both countries is not necessarily what the tax treaty says. Bringing - or not bringing - the money to the United States has no tax effect.
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Old Aug 16th 2019, 11:36 am
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Default Re: Help needed - company pension in UK, getting it to the US

Originally Posted by britess View Post
No, not declared on any tax form. I had gone into a company pension plan back in about ‘87 and didn’t think any more about it. They transferred me out here in ‘93. I got a letter from them in around 2007 that they were thinking about getting out of the company pensions business and offered a bonus to move it but I only had a weeks notice and couldn’t do a thing in that time so I told them I didn’t care about the carrot of the bonus and leave it where it was which was an option and I forgot all about it again until I came across some paperwork..To me it’s just my pension that I’d forgotten all about but now it’s become a nightmare. No accountant doing my taxes since 1993 had ever asked if I had a pension in the UK, after the first 10 years of being here seeing that I always said no to having any foreign savings as they always called it stocks and shares and savings accounts, they stopped asking. My new accountant is an ex IRS agent I’m going to go in and see him this morning re any immediate tax implications but that still doesn’t help my situation about what on earth to do now although I really do appreciate the heads up.

A thought, while I had forgotten all about the pension, originally when I moved here I honestly gave it no thought at all as it was just a pension but I’ve never received any paperwork about it after the letter from the company offering me the option to move it. They had my address. From 2007-2012 I lived at that same address and didn’t get a thing. When I remembered about it I went to the govt site to look for the plan, found the original plan and found it archived, I called the correct govt department and was told that hopefully I’d be able to find my pension..... I was but no thanks to them. When I found who had it, it was a huge relief. But my address would have been the same one as 2007. This thing has grown surely something at some time should have been coming out or are these things just left to sit there?
You'll want to budget 5% of the value to deal with the IRS SDOP penalty. As your existing adviser seems not to have thought to ask you about non-US financial assets, hopefully his error & omission insurer will pay the 5% penalty if he will not pay it himself. Has he much experience of handling cases filed under the SDOP?

Last edited by Cook_County; Aug 16th 2019 at 11:47 am.
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Old Aug 16th 2019, 11:44 am
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Default Re: Help needed - company pension in UK, getting it to the US

I don’t have a financial advisor, just gone through various accountants in my time here to do taxes. We’re straight forward taxes, but we’ve always had them done professionally as even though I’ve got a brain taxes aren’t something I’d play with. Look at where I am now.....

The only things I have are a yellowed set of papers from 2007 showing when I entered the scheme, when I left it, what the value was in 2007, then the nice new white piece of paper from 2 months ago.
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Old Aug 16th 2019, 11:48 am
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Default Re: Help needed - company pension in UK, getting it to the US

The SDOP is explained here: https://www.irs.gov/individuals/inte...-united-states
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Old Aug 16th 2019, 11:58 am
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Default Re: Help needed - company pension in UK, getting it to the US

Thank you. I guess I’ll be going to see my acct at 9 this morning. All I have as I said, are the papers they had sent in ‘07, and that was only because they were thinking about no longer doing the group pension, I found out a couple of years ago they went from a PLC to private. It was coming across these that’s triggered this. I really do thank you for your help.
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Old Aug 16th 2019, 12:09 pm
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Default Re: Help needed - company pension in UK, getting it to the US

On the tax side, you will get credit from the IRS for any tax paid in the UK, so if the US tax is more than the UK tax then you only have to pay the difference to the IRS. Since you will get some of it tax free in the UK that is the most likely situation. The IRS will tax it all of it as ordinary income, the rate obviously is determined by your other income. If you are still working and your income tax rate will go down in retirement you could leave it until then, but like I said before, probably best just to get it over and done with now, especially as it appears to have been a bonus find for you.

On the SDOP 5% penalty, because this is a pension plan it is unlikely that there was any income (distributed to you) that you would have had to pay tax on, therefore if no tax was due you should not have to pay the penalty. You just need to fill in the past due FBARs and possibly refile the past 3 years tax returns to include the pension funds on Form 8938, but that only applies if you have overseas assets over a particular value. Google IRS Form 8938 and you will find plenty of information. This link may help you on retrospectively declaring foreign assets
https://www.irsvideos.gov/business/F...rSomeTaxpayers

There are plenty of sources who like to scare people to death over foreign assets, and it is totally unnecessary unless you have deliberately evaded taxes, in which case you should worry (a lot).
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Old Aug 16th 2019, 12:17 pm
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Default Re: Help needed - company pension in UK, getting it to the US

Well I can say hand on heart I’m guilty of brain fog but absolutely not of hiding this. The value in 2007 was 43K and it’s gone up a lot and 2 years ago we were surrounded by forest fires due to no rain for months and I’d thrown all valuable papers into a brief case so that in the event we got a mandatory evacuation it would be a case of grabbing that, the family and the dogs and go. I decided to sort them out... my husband and I both have medical issues, mine is nothing compared to his so believe me, losing this windfall would make me cry.

Last edited by britess; Aug 16th 2019 at 12:20 pm.
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Old Aug 16th 2019, 1:31 pm
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Default Re: Help needed - company pension in UK, getting it to the US

Originally Posted by britess View Post
When I remembered about it I went to the govt site to look for the plan, found the original plan and found it archived, I called the correct govt department and was told that hopefully I’d be able to find my pension..... I was but no thanks to them.
I know the pain. A couple of years ago I discovered a 'pension statement' piece of paper from 1984. Related to employment at the time. After I left that company in 1986 it had been bought out, the bigger company eventually merged, was bought, transferred, closed. I had big success tracing the pension on the government site and after that it all went downhill. The address shown for the fund administrator did not exist. When I tracked down the 'real' address for them, the fund administrator shown as owning whatever was left denied all knowledge and said the government site was wrong. The government site vigorously denied their data was incorrect - despite it showing an invalid address. Etc. Luckily in my case the amount involved was not significant.

Good luck getting yours fully sorted out.
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Old Aug 16th 2019, 1:47 pm
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Default Re: Help needed - company pension in UK, getting it to the US

I’m on the way to my accountants, I’ve just pulled the old and new paperwork, what I never noticed was info on a company my ex employer was going to hand the plan over to. Surely they would have given them my info or were my funds just handed over with my name and NI number? No wonder I had a hard time tracking them down to where they are now.
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Old Aug 16th 2019, 7:13 pm
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Default Re: Help needed - company pension in UK, getting it to the US

Originally Posted by britess View Post
Well I can say hand on heart I’m guilty of brain fog but absolutely not of hiding this. The value in 2007 was 43K and it’s gone up a lot and 2 years ago we were surrounded by forest fires due to no rain for months and I’d thrown all valuable papers into a brief case so that in the event we got a mandatory evacuation it would be a case of grabbing that, the family and the dogs and go. I decided to sort them out... my husband and I both have medical issues, mine is nothing compared to his so believe me, losing this windfall would make me cry.
The most important thing to become compliant ASAP. Now that you are aware of the requirement to declare your pension on FBARs and possibly Form 8938, you need to do so or your will be regarded as willful and that does change the situation.

From what you have stated you are non willful to this point. You are not going to lose this windfall. You will get taxed on it as ordinary income but that is all. There are a lot of people in a very similar situation, more than you could guess. You will not be regarded as a criminal. You should not be paying any penalties either unless you personally received income from the pension plan (or had other undeclared foreign income) which is extremely unlikely .

Completing the FBARs and Form 8938 is not hard if you take your time and pay attention to detail. You do not need an expensive attorney to do it for you, although there are plenty out there charging an arm and a leg. You will have to file FBARs from 2018 back to 2013. For the maximum value I would use the most up to data you had for that year, which may mean that you use the same statement from prior years if that was the most recent data you had for that tax year. Or, just use the most current data for all of the FBARs, or call the pension administrator and see if they can give you any intermediate data.

If you invest the proceeds in a SIPP, you could get into a whole other mess of forms. Some people insist that you need to file them as a foreign trust, some say that is not so. Even the IRS do not have a definitive answer. Either way best to keep out of that mess If your hesitation on cashing in now in now is the taxation issue, then that is unlikely to change or get any better unless your tax rate will drop substantially in the future.

Last edited by Glasgow Girl; Aug 16th 2019 at 7:24 pm. Reason: Clarified
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