md95065

More to the point, ask him to show you chapter and verse from the IRS regulations to show that they do recognize it.

After all, isn't it his job to do that?

nun

The OP needs the assistance of an IFA or tax professional who is experienced in the consequences of US residence and cross-border pensions. Suggesting a QROP makes me believe that the OP is not getting the most appropriate advice.

scrubbedexpat099

I had a conversation with an IFA on this subject, he said that they could not comment and I would need professional advice from the US.

nun

The UK/US tax treaty provides shelter from UK taxation on distributions from UK pensions held by US residents so there's no tax advantage to a QROP. You will also have the complication of dealing with the US taxation of the QROP wherever it is located.

There is a lot of debate about which UK pensions the IRS considers to be covered by the treaty, but if you are a US resident you can apply to have zero income tax withheld from UK distributions from UK-source pensions, (including personal pensions and the State Pension), incapacity benefit, purchased annuities, royalties and interest.

scrubbedexpat099

Thanks

Dogspeak

I'm being faced with an interesting challenge in that my UK SIPP, already in draw-down, has to be moved because the change in UK regulations make it impossible for my SIPP broker to continue with me as a US client: I'm a US Green Card holder.

The advice I am being given is to take out a QROPS with one of the Maltese companies listed by HMG, as only those companies in Malta meet the IRS conditions.

And I seem to be paying significant taxes on my UK income from that SIPP.

Frankly, would love to have a dialogue with someone who made more sense of all this than me!!

Best wishes to all,

Paul

nun

What are these new UK regulations that mean you cannot keep your SIPP with your broker? If you own a SIPP as a US resident and/or citizen you should make sure you understand it's US tax implications and whether you treat it as a foreign grantor trust or as a pension under the treaty.

Under the UK/US tax treaty income from UK pensions and annuities paid to US residents is free of UK taxation. You file a US-Individual-2002 form to claim relief from UK taxation.

If you are US resident don't do a QROP. A QROP is expensive and the "IRS regulations" mentioned are probably those that apply to complex insurance wrappers that will charge you big fees. The IRS does not recognize the tax deferral of foreign pensions absent a tax treaty and do you want to start dealing with US/Maltese crossborder taxation?

theOAP

You need to determine if it is in fact "UK regulations" (I don't know of any in existence at this time preventing US Persons from owning an account, unless it's something to do with residence, which I doubt), or the UK SIPP brokers reaction to the impending US FATCA regulations and their potential reporting responsibilities. A number of 'US Persons' are now being 'dumped' from current products around the globe due to the impending FATCA legislation.

Dogspeak

Dear Nun,

Thank you for so promptly coming back to my post. I am being forced to change because the present broker, Redmayne Bentley, have given notice that as I am now a US resident they can no longer afford the reporting issues and my SIPP brokerage account must be closed, effectively meaning I have to find an alternative solution; and pretty quickly.

I share your concern about the suitability of a QROPS scheme - just wish I could find another broker in the UK who I could transfer my SIPP to.

Once again, thanks for your input.

Dogspeak

Dear OAP, you were quite right to pick up on my incorrect explanation of UK Regulations. I would bet your assessment is 100% correct.

nun

It sounds like your SIPP provider is running scared of FATCA. I'd push back a bit and get them to explain, it will cost you time and money to transfer your SIPP so I'd give your brokers some grief. If you get no satisfaction I would move your SIPP to a larger provider who won't hold your US residency against you so much. Maybe one of the high street banks would work although I believe you have to be UK resident to open a SIPP and I don't know if that also includes transfers. If you get in trouble these guys might work

http://www.masecoprivatewealth.com/new2010/home.php

Let us know what happens as a number of us are interested in how the UK is dealing with FATCA in reality rather than in some powerpoint presentation or white paper.

scrubbedexpat099

Unless he has a UK Residence or an existing account, unlikely to work.

nun

Any developments......there were moves to exclude pension plans from FATCA and here is a statement from HMRC about FATCA. I'd be really mad if my pension provider just told me to get lost, I hope you are bending their ear about it.

http://www.hm-treasury.gov.uk/joint_...ment_fatca.htm

scrubbedexpat099

Classic Catch 22.

However it only seems an issue if your UK Financial Provider knows you are not UK resident. Assuming they do not wish to be involved in all the extra hassle of reporting FACTA.

nun

Yeah, but UK financial institutions are now required by the UK Government to provide information about US citizens or residents with accounts, so they usually ask you to identify yourself. Also if you want your UK pension to be paid free of UK tax you will have to identify yourself as a US resident.