QROPS....once and for all, does this work?
Jun 3rd 2012, 1:21 pm
#46
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Joined: Aug 2004
Posts: 4,754
Re: QROPS....once and for all, does this work?
Pension payments are classed as passive income and payments from tax deferred pension accounts are almost always taxed at your marginal income tax rate. Exceptions are the 25% tax free lump sum in the UK and things like US ROTH accounts because you fund them with money that's already been taxed; withdrawals from those are the tax free.
Jun 3rd 2012, 5:13 pm
#47
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Joined: Jun 2011
Posts: 19
Re: QROPS....once and for all, does this work?
I think you can only cash in UK pensions if their value is very small.....something like 1% of the maximum amount you could have in them before you incur tax ,that's 18000 GBP this year, and you can't do it before age 60. Please check this with your pension provider.
This attitude in the UK is far different from the US. In the UK you are forced to buy annuities to fund retirement and there are lots of barriers to getting at your money. In the US the only barrier is the 10% early withdrawal penalty and you can even get around that by taking money out on an annuity schedule. Once you reach 59.5 you can do whatever you like with your money, you just have to pay income tax on any withdrawals.
So the answer to your question is probably that you can only cash in you UK pension if the value is under 18k GBP and you are over 60. However you do get the 25% UK tax free lump sum which you can transfer to the US and pay US income tax on.
This attitude in the UK is far different from the US. In the UK you are forced to buy annuities to fund retirement and there are lots of barriers to getting at your money. In the US the only barrier is the 10% early withdrawal penalty and you can even get around that by taking money out on an annuity schedule. Once you reach 59.5 you can do whatever you like with your money, you just have to pay income tax on any withdrawals.
So the answer to your question is probably that you can only cash in you UK pension if the value is under 18k GBP and you are over 60. However you do get the 25% UK tax free lump sum which you can transfer to the US and pay US income tax on.
What I want to do if I can get my hands on it is use the fund to buy a US Social Security annuity for when I'm 65, currently 61. It's around 30k
Last edited by redv; Jun 3rd 2012 at 5:35 pm.
Jun 3rd 2012, 7:16 pm
#48
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Joined: Aug 2004
Posts: 4,754
Re: QROPS....once and for all, does this work?
huh? You can't buy into US social security. You could by a Single Payment Immediate Annuity (SPIA) from companies like TIAA-CREF or MetLife, but $30k would buy you very little.
Jun 3rd 2012, 7:47 pm
#49
Account Closed
Joined: Mar 2004
Posts: 2
Re: QROPS....once and for all, does this work?
Pension payments are classed as passive income and payments from tax deferred pension accounts are almost always taxed at your marginal income tax rate. Exceptions are the 25% tax free lump sum in the UK and things like US ROTH accounts because you fund them with money that's already been taxed; withdrawals from those are the tax free.
Sep 6th 2012, 11:32 pm
#50
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Joined: Nov 2007
Location: South Staffs UK & Gulf Coast Florida
Posts: 137
Re: QROPS....once and for all, does this work?
- it can't be done!!Whilst transfers (most cost efficient with funds of over £200K) to a Malta QROPS are possible and attractive to some, it will also generate annual US reporting returns as well as the perennial unanswered question of whether the transfer actually is taxable.
You can leave it in the UK and contact a UK adviser (preferably one versed in US-UK matters) at or approaching retirement.
If you're worried about the exchange rate then you can partly/fully invest in dollar denominated funds as a hedge in most UK SIPPS, or QROPS.
For information and general consumption - content is not advice and should not be construed as such.
Sep 7th 2012, 1:06 am
#51
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Joined: Aug 2004
Posts: 4,754
Re: QROPS....once and for all, does this work?
Been away from the forum for a while but amazed to see how many people still asking if a UK to US (QROP) transfer can be done. How many times does it have to be repeated - it can't be done!!
Whilst transfers (most cost efficient with funds of over £200K) to a Malta QROPS are possible and attractive to some, it will also generate annual US reporting returns as well as the perennial unanswered question of whether the transfer actually is taxable.
You can leave it in the UK and contact a UK adviser (preferably one versed in US-UK matters) at or approaching retirement.
If you're worried about the exchange rate then you can partly/fully invest in dollar denominated funds as a hedge in most UK SIPPS, or QROPS.
For information and general consumption - content is not advice and should not be construed as such.
- it can't be done!!Whilst transfers (most cost efficient with funds of over £200K) to a Malta QROPS are possible and attractive to some, it will also generate annual US reporting returns as well as the perennial unanswered question of whether the transfer actually is taxable.
You can leave it in the UK and contact a UK adviser (preferably one versed in US-UK matters) at or approaching retirement.
If you're worried about the exchange rate then you can partly/fully invest in dollar denominated funds as a hedge in most UK SIPPS, or QROPS.
For information and general consumption - content is not advice and should not be construed as such.
Leaving the pension in the UK will require some sort of US tax filing long before retirement and will depend on the type of UK pension ie SIPP or defined benefit and the way you decide to deal with potential US taxation of growth in the pension before your retirement date. That's why QROPS for US citizens and residents are pretty useless, they don't help in the paperwork required to satisfy the IRS and make things difficult by removing the pension to a third jurisdiction.
