Bluegrass Lass

This is all a bit worrying to read. My OH had a private pension plan before he left the UK back in 2004. Like you all confirmed, it was nigh on impossible to do a QROPS transfer, so it's just been sitting there. Its been "out of sight, out of mind" and TBH, we totally forgot about it until I read this thread.

I think it may have had about £6k or £7k in it back in '04. We have no idea what's in it now, as he doesn't get any statements from them. I guess we are going to have to track this down and see about getting statements again so we can file a form on it (whichever form that might be).

Does anyone think we'll have problems with doing the reporting on this all of a sudden, or will the IRS think we've been hiding it all these years and penalize us for it? Hell, it's not like we can do anything with it, except let it sit there.

nun

Yep FATCA, that's always the joker in the pack.

I was also a bit worried about the lack of previous FBARs for the $100k pension so this is a situation where where professional advice is definitely needed.

nun

Just to be pedantic you have gains in your pension and under IRS rules you do have to declare your UK pension and pay tax on those gains. The forms would be numerous including those for trusts, PFIC etc.; a paperwork nightmare. The reason an argument can be made for you not declaring your pensions or gains is the exemption in Article 18 of the tax treaty.

nun

It's good you know about the situation so you can do something about it. You should definitely be filing FBAR for a personal pension if it is worth more than $10k. Also you can claim exemption from tax so there should be no tax due. You may have to go back six years and file amended taxes to prove to the IRS that your owe them nothing. There was a voluntary disclosure program in effect until this August, but I don't know how the IRS is dealing with this now. But the small amount involved and no tax being due are in your favor. It may well be worth seeing a professional for your peace of mind.

theOAP

If I'm following your situation correctly, you'll be back in the US next year. After your adventures of this year, it would be advisable to seek assistance with your 2011 US return and 2011/12 UK return.

The answer to the above question is "who knows?". As you've discovered from other sites (and nun's previous link to the intuit site), even the professionals can disagree. If the funds were in a UK company defined benefit scheme that can be equated to a US company defined benefit scheme, then in most cases, the answer would be no FBAR required (This is my understanding, and could be wrong!). But, you are defining the pension as a private scheme, so all the rules change. £7,000 at 1.60(est.) takes you over the FBAR threshold. The more critical observers will say you should have been filing FBARs and should take steps to correct the situation. Others will say now that you realise the situation, start reporting the pension on 2011 reports and hope for the best. You and your OH will have to determine your choice, possibly with the help of a competent tax advisor. They may, or may not, be 100% correct in their assessment since no one knows what is 100% correct (at times, not even the IRS).

I hate to continue using indefinite words such as 'most', 'could', 'may', and 'possibly', but there really are no straight forward answers for all FBAR and FATCA issues. They are subject to interpretation. As I've noted, you can get two opposite opinions even from professionals.

Bluegrass Lass

Believe me, we will be seeking help with our taxes for this year. We're just not sure where to begin to look for accountants on the US side of the pond (or if we'd be better off using someone in the UK). We've always used TurboTax, and I wonder just how easy it's going to be find a tax advisor versed in the UK/US tax treaty and foreign income.

nun

I'd given Greenback tax services a try. Some people have reported good experiences with them. I have no personal knowledge of them, but at least their website is reasonably informative. For a full service option that might be a bit expensive, but you'll have personal service from a very well informed accountant try British American Tax

TexasPenguin

Just as a pointer - what do you categorize as "a bit expensive" for the full service option you speak of above? I'm thinking of trying them myself.

nun

Inexpensive would be $300 to $400 for a return. Expensive would be 2 or 3 times that and a few hundred an hour for consulting.

mattw89

FYI everyone, Aviva's reply.

Hello Mr,

I apologise for the delay in coming back to you regarding transferring you pension to a plan in USA.

I have received a response from our Legal department that states US schemes do not accept direct transfers from overseas schemes (to them), whereas the UK regime does not allow us to release the funds
to you to be paid to the US scheme as a member contribution. Therefore, to the best of our knowledge, the transfer cannot proceed.
This would, however, need to be checked with an expert in the US system, probably in the form of a US pensions/financial advisor, or a US pensions provider.

I'm sorry I wasn't aware of the US rules regarding pension transfers when we spoke on 30 November, and do apologise for any inconvenience caused.

Regards.

nun

An excellent response.