UK Pensions - Qualifying or not
Feb 8th 2019, 9:58 pm
#1
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UK Pensions - Qualifying or not
Just completing taxes with Turbo Tax. Having to do substitute 1099R for UK occupational and State pensions. I clicked the box that they were all non-qualifying pensions. Just checking that is correct?
Feb 8th 2019, 10:26 pm
#2
Wondering if...
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Re: UK Pensions - Qualifying or not
I have 2 occupational pensions from the UK and have set them as non-qualifying in Turbotax. Doesn't mean you are correct but that was also my interpretation of the guidelines for classifying them.
Feb 8th 2019, 11:39 pm
#3
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Re: UK Pensions - Qualifying or not
On this question of a Substitute Form 1099R, i.e. a Form 4852. (I realise that if you use tax preparation software you are obliged to create this, in order to enter the needed data for the tax prep.) However, I do my tax using manual labour and paper forms. The first couple of years, I filled out the Form 4852, then I let it lapse - I've gone four or five years not providing any explanatory backup for our three UK pensions. Since there are seven different pensions/annuities included in that one line, only four of which are backed up by 1099R, I can only assume they just take my figure on trust. If they queried it, I could produce bank statements to show the amount received. Is there actually an obligation to generate a Form 4852?
Feb 9th 2019, 3:05 am
#4
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Re: UK Pensions - Qualifying or not
Robin I don’t think there is a obligation to submit a Form 4852, or at least it isn’t enforced. One of the interesting, or worrying, parts of doing my own taxes this year, is the information TurboTax required which my CPA didn’t. In the past my CPA has never asked who pays my UK pensions or their address so I guess he didn’t send Form 4852.
Feb 9th 2019, 3:07 am
#5
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Re: UK Pensions - Qualifying or not
Thanks, that was one of the few sections of TT that I found the explanation notes were unclear.
Feb 9th 2019, 9:16 am
#6
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Re: UK Pensions - Qualifying or not
I also mark my 2 UK private pensions as non qualified. I think that if a pension is not reported on a 1099-R then it is non qualified. I also have 2 US private pensions and I report 1 of those as non qualified as it is reported on a W2 but marked as a pension with no payroll taxes withheld. Because that US non qualified pension comes from a Louisiana employer and is non qualified I have to pay Louisiana State taxes on it. Been through discussions with the Louisiana IRS on this as has my employer who has to make mandatory withholding for State taxes.
Makes no difference on how my pensions are taxed.
Makes no difference on how my pensions are taxed.
Feb 9th 2019, 10:05 am
#7
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Re: UK Pensions - Qualifying or not
"A qualified retirement plan is included in Section 401(a) of the Tax Code and falls under the jurisdiction of ERISA guidelines.
A non-qualified plan does not fall under ERISA guidelines so they do not receive the same tax advantages."
https://www.investopedia.com/ask/answers/206.asp
I've always understood a tax treaty may allow taxation of a 'foreign' plan to be treated/taxed as a 'qualified' plan in the contribution stage, but it remains a 'nonqualified' pension, especially in the draw down stage.
Feb 9th 2019, 10:53 am
#8
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Re: UK Pensions - Qualifying or not
On this question of a Substitute Form 1099R, i.e. a Form 4852. (I realise that if you use tax preparation software you are obliged to create this, in order to enter the needed data for the tax prep.) However, I do my tax using manual labour and paper forms. The first couple of years, I filled out the Form 4852, then I let it lapse - I've gone four or five years not providing any explanatory backup for our three UK pensions. Since there are seven different pensions/annuities included in that one line, only four of which are backed up by 1099R, I can only assume they just take my figure on trust. If they queried it, I could produce bank statements to show the amount received. Is there actually an obligation to generate a Form 4852?
In the early days, a copy of UK pay slips was included, but that ended 30+ years ago. I have UK pay slips that show end of Dec. pay accumulation (Apr. to Dec.) and the Apr. pay slip for the following UK yearly pay accumulation, for all 35+ years. From the two, it's easy to determine UK pay for any US tax year. It's the same if the 'pay' is from pensions. Then, there's also all the bank statements.
Since no UK employer/pension administrator is going to send a verifiable W-2/1099, the IRS always have to 'take your word for it' whether a 4852 is filed or not. Of course, if you do file a 4852 and it is incorrect, there are substantial, separate penalties pertaining to the filing of that inaccurate form 4852 on its own and separate from other 1040 penalties.
Feb 9th 2019, 1:10 pm
#9
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Re: UK Pensions - Qualifying or not
Maybe it's my "American" mindset, but I think it is rather odd that the British State Pension folks (DWP?) don't send out a statement as to how much pension they've paid you, at least once a year. Fortunately the line on the bank statement is pretty information-rich.
Thanks to all on your opinions on this question.
Thanks to all on your opinions on this question.
Feb 9th 2019, 4:47 pm
#10
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Re: UK Pensions - Qualifying or not
I've always entered UK-based pension income in TurboTax under 'other income'. Never had a push back or question from the IRS.
Feb 9th 2019, 6:13 pm
#11
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Re: UK Pensions - Qualifying or not
The help section of TT said to the effect “if you don’t know if your plan is a qualified plan or not, call the plan manager and ask”. Helpful advice if it’s a US plan,but not much use for an overseas one. I assumed that if I did ask the plan managers in the UK they wouldn’t know what I was talking about, so they were probably non qualifying.
It does seem from the various comments that there is a little bit of leeway given in providing a 4852 or not. As it’s the first time I’ve done my own taxes and have already put the information into TT I’ll submit them. There isn’t in fact much information to include, name, address of payee and amount paid/taxable. No taxes were withheld and I got the total amount from my UK bank statements. Submitting also provides myself with a record of how I arrived at the total of our UK pensions.
It does seem from the various comments that there is a little bit of leeway given in providing a 4852 or not. As it’s the first time I’ve done my own taxes and have already put the information into TT I’ll submit them. There isn’t in fact much information to include, name, address of payee and amount paid/taxable. No taxes were withheld and I got the total amount from my UK bank statements. Submitting also provides myself with a record of how I arrived at the total of our UK pensions.
Feb 9th 2019, 6:20 pm
#12
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Re: UK Pensions - Qualifying or not
i really don’t think it matters as the chances of an audit are very slim.
Feb 9th 2019, 10:27 pm
#13
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Re: UK Pensions - Qualifying or not
The help section of TT said to the effect “if you don’t know if your plan is a qualified plan or not, call the plan manager and ask”. Helpful advice if it’s a US plan,but not much use for an overseas one. I assumed that if I did ask the plan managers in the UK they wouldn’t know what I was talking about, so they were probably non qualifying.
It does seem from the various comments that there is a little bit of leeway given in providing a 4852 or not. As it’s the first time I’ve done my own taxes and have already put the information into TT I’ll submit them. There isn’t in fact much information to include, name, address of payee and amount paid/taxable. No taxes were withheld and I got the total amount from my UK bank statements. Submitting also provides myself with a record of how I arrived at the total of our UK pensions.
It does seem from the various comments that there is a little bit of leeway given in providing a 4852 or not. As it’s the first time I’ve done my own taxes and have already put the information into TT I’ll submit them. There isn’t in fact much information to include, name, address of payee and amount paid/taxable. No taxes were withheld and I got the total amount from my UK bank statements. Submitting also provides myself with a record of how I arrived at the total of our UK pensions.
