SiF

Hi,

I'm moving to the US next year and I have to close down my ISAs and was looking to put the cash in a SIPP and as I've not paid into a pension for 3 years back fill it a bit and get the tax bonus from HMRC.

Having spoken to a couple of US/UK accountants I get mixed views, one (who definitely sounded like she knew what she was talking about) said a SIPP is fine as you have ownership so would not be taxed on income and it fits in with the tax treaty so it wouldn't have to be reported as a trust (which apparently can cos 2-3K a year for filing the relevant paperwork).

Another (was less convincing) said it would need to be reported as a trust and thus incur the costs of filing the relevant documents because the penalties for not filing them would "bankrupt" me. 2-3K a year in filing costs isn't something I'd relish on a modest SIPP!

So looking for any advice or experience, would I just need to file forms (FBAR and 8938 I think?) detailing the accounts and not worry about the tax side or is it risky to assume I don't need to treat it as a trust?

Thanks

Si

MidAtlantic

You will need to consider who you open your SIPP account with, because some providers will not accept someone with a US address. My SIPP was with Hargreaves Lansdown when I moved and they were OK with it. However their fees were high. I subsequently moved my SIPP and some small personal pensions to AJ Bell, who are one of the few UK providers who will allow a US resident to open an account. I have been very satisfied with them and saved significantly on fees.

For tax purposes I treat my SIPP as a pension scheme and do not report it, but will report when I start drawing income from it.

You are correct. You need to consider FBAR if you have foreign (to the US) financial accounts which have a combined maximum value of $10k or over. This is completed on-line and is separate from your tax return. It is relatively easy to complete.

Form 8938, which is part of the tax return, may also come into play. The reporting thresholds are here:
https://www.irs.gov/businesses/compa...r-requirements

SiF

Thanks for the response.

Funnily enough I was just looking at SIPP providers and HL and AJ Bell were the 2 main ones and given I'd be looking at around 120K which I'd then never add to, as I'd be out of the UK I think AJ Bell is the way to go.

Given that amount and looking at that link I think then that it does need to be reported on the 8938?

One follow up question, does it matter what you invest in within the SIPP or is just the fact it's a SIPP sufficient to class it as a pension?

Cook_County

A SIPP is arguably a foreign grantor trust. This requires filing of Forms 3520-A and 3520. If these are not filed but the IRS later determines they were due the penalties would be truly horrid. Information returns are not covered in the US/UK tax treaty at all; so this leg of the argument is not very convincing. http://www.buzzacott.co.uk/getattach...ut-uk-pensions

SiF

Thanks for the link very interesting, this just highlights my dilemma, any time I look into any of this I always get conflicting reports. It wouldn't be so bad if it didn't cost thousands, apparently, to file trust documents or they were easy enough to file myself.

I'm more convinced than ever that the IRS exists to make tax complicated enough to understand that personal accountants will never go out of business!

If only it were simple to determine based on "The majority of SIPPs are held under trust, with the provider acting as trustees", whether a particular SIPP qualifies or doesn't but even the IRS documents related to whether something is a Foreign Trust are ambiguous and convoluted...you'd almost think the IRS was trying to keep lawyers employed as well as personal tax accountants!

Sorry got a bit cynical towards the end there just all so depressingly confusing!