mattw89

Hi Everyone,

So, I contacted Aviva and enlightened my with the word QROPS in terms of transferring my pension to my new 401(k).

Naturally, the first place I came to research this was searching on this board.

I found a lot of info on there, which mainly seems to suggest that it is not worth bringing the fund over to the USA for such small value. (I'm only 22, that was 8 months worth of contributions).

So, what should I do with it. I will not be contributing anymore to this, as this was my previous employee scheme and I have no money over in the UK nor intend to go back there just yet.

Should I just forget about it and let 1500 mature for the next 50 years, or do you think I should just withdraw it for a penalty (if that is even possible?). Slowly trying to sort out all my finances...

avanutria

I left mine alone; no idea how much is in it but I worked for about two and a half years in the UK. I figured I can live without it now and it'll be a nice (yet small) bonus when I come 'of age'.

Bob

Leave it be...on that sum of money, it's not worth taking a hit on cashing out and it's not worth bringing to the US, just let it stew and forget about it...it'll be a nice little bonus years down the line...might even afford a take out on it once a month

kodokan

I'm in the same boat; my Aviva pension has about £3k in it from many years ago. I'm not contributing to it, am decades off withdrawal, and am happy to let it sit.

But what is everyone else doing about tax/declarations on these? We shall be doing our first tax return in a few months, and I'm failing to get a straight answer off anyone as to whether these sort of pensions needs to be (1) declared for tax, (2) declared for FBAR reporting, and (3) declared for PFIC (foreign 'mutual fund') reporting.

If it's necessary to declare, I can't even bgin to imagine how Aviva can provide the necessary information about dividends received, highest balance during 2011, etc, in a format that works for a calendar-year tax year rather than an April to April one...

Bob

It's not really that hard to declare, won't have a FBAR as it's under $10K and you'd get a annual amount of interest, which you use the average exchange rate for it and declare that on your taxes.

Though you're moving on a company transfer aren't you? So really, the company should be paying for someone to do your first year taxes for you, well it's one of the first things folk negotiate in their contracts, after the greencard.

kodokan

Our overseas accounts total more than $10k, so it's more a question of whether to include it on the declaration - 'yes' would seem the safe answer!

You're right, we will have a Big Four accounting firm doing our taxes, but even they don't seem able to give me a clear answer; the legislation's all so new, I think, and ultimately we're the ones who'll have to sign the return so I'd like to fully understand what's required.

Not sure what you mean by interest..? It's a pension, invested in... um... unit trusts, I think. There's no interest, and there's not even a dividend received in the sense that you'd get from a single share (I sold all those before moving here, to try and simplify my life). All I get is the usual annual statement that on X date the pot was worth Y amount, which at retirement age might provide an annual payment of Z.

I suppose I could ask Aviva to invest it all in cash rather than equities, which would make it easier to report the highest balance during the calendar year.

But what is everyone else doing? I surely can't be the only person on this board with a defunct, just-sitting-there UK (stakeholder, in my case) pension. Does the Tax Treaty remove the need for reporting these? Are they deemed foreign trusts for PFIC reporting (seriously hoping not, as the IRS estimate this as a 15 hour workload form ).

Clues, anyone? Please? I'll share back any knowledge I get from the accounting firm, but at the moment they're really not filling me with confidence and I'd love to hear what other UK citizens are actually doing!

nun

This is easy. You cannot do a QROPS to a US retirement account as IRS does not recognize it. Cash out the pension if you can, or just leave it alone and deal with the US reporting.

nun

The US taxes on your UK pension will depend on your tax residency status, it's exact nature and how it is covered by the tax treaty and whether or not you want to invoke the treaty. Here is an explanation.

http://www.taxalmanac.org/index.php/...Pension_/_SIPP

mattw89

Well, no chance of early withdrawal.

Hello Mr Magoo,

After the initial 30 day cancellation at the beginning of the plan, benefits must remain in a pension arrangement until retirement age.

The earliest benefits can be taken from your pension plan is age 55.

This is as set by government legislation concerning UK administered pension plans.

I will let you know as soon as possible whether transferring to USA would be an option.

Regards,

nun

It wil be interesting to see the answers. Moving the pension to the US through QROP is not possible, and any answer should also give you options between A treaty claim and doing the trust/ PFIC taxation options

TexasPenguin

Well, I'm in a similar boat, but with a bit more money at stake - around 100K GBP. (Well, I am a lot older!).
I successfully moved this to a UK SIPP (Sippdeal) and manage it much like an IRA from here.
Don't listen to people who say you can't do this as a US citizen (or non UK resident), you can, it's just there are very few companies you can do it with.
Ultimately I intend to retire in the UK (another 15 years or so) so it makes perfect sense for me to leave it there.
Just giving another point of view, 'tis all....

nun

I think the OP would be interested to know how you handle the UK SIPP on your US taxes as that's applicable to his situation.

TexasPenguin

Well, actually next year will be the first year since I started the SIPP. My understanding is that I will need to declare this on FBAR - since this was a "lost" pension that I only "found" this year I can legitimately start declaring it in next year's FBAR, but I don't need to declare this on the tax return since there's no income. Of course, when I start to take income, whether here or in the UK, since I'm a US citizen I will have fairly complex tax situations then...

nun

I'd check with your tax advisor about just how the UK pension is being dealt with. It sounds as if you are claiming the Tax Treaty, Article 18 exemption. Some people feel that a form 8833 should be filed even though income from pensions is in the exceptions. It is certainly necessary to describe your pensions on the FBAR.

Here is a link where two tax professionals, Lizzit and Guya, give different opinions on the handling of US tax reporting on a UK SIPP. I like Lizzit's position.

https://taxresearch.lcp.intuit.com/p...arriving-in-us

theOAP

Wrong. Unless the Pound drops dramatically, and even if filing 'married filing jointly', 100K GBP (@1.60) means you may have to file 8938 (Part II) with your 1040 if you have that amount in the SIPP on 31 December 2011 and you are resident in the US.

http://www.irs.gov/pub/irs-dft/i8938--dft.pdf

(see page 2 of instructions.)

Not to pry, but was the pension really 'lost'. Did the funds always exist, but not to your knowledge? If so, be prepared to explain to the Treasury/IRS why you were unaware of it, and therefore didn't file FBARs if required. (This isn't meant to cause panic. If you were truely unaware, then it's just an explanation, if asked.)