Russet

Thank you, mine states ...'Received Feb 6th 2019 ' 'Expect a response by 23 March 2019'. Good to know.

Jimbo99

I just found this site and have spent the last 2 days scrolling through - very informative but a bit daunting. I could not find the answer to all my questions so will pose them here

I will have 30 years in US SS in 2021. Can I claim this in 2021 without WEP impact or do I have to wait until 2022?
My wife has not worked in the USA but has a (small) UK pension. My understanding is that she can claim 50% of my US SS and this will not be subject to WEP as I will have 30 years SS contributions. Is this correct?
I read that you can take 25% of UK pension as a lump sum tax free - is this the case for the UK State Pension? Is it tax free in the US?
Are there recommendations on the best way to have the UK Pension paid directly to a US bank account?

Thanks for any input,
Jim

Nutmegger

lansbury

If you want to avoid WEP you should not take SS before you have 30 years of qualifying contributions. If your wife's SS is based off of your account she will not be subjected to WEP.

As to the 25% UK lump sums being tax free in the US that is a subject of much debate. My reading of the various documents leads me to believe if you live in the US and are only a British citizen it is tax free. If you are a US citizen it is taxable in the US. Professional guidance is worth obtaining before going to far. The UK State pension does not have a tax free lump sum.

If you want the UK State pension paid into a US bank all you have to do is give the Pensions Office those bank details. They do the rest. The UK State pension should be entered on your US tax return and is taxable in the US.

fn-expat

Beware of misinformation floating around the internet, but be aware that the basic principle regarding taxability of state pensions from the US and from the UK is they are taxable only in the country of residence. So your UK State pension (whether ongoing or lumpsums) and Social Security will both be taxable only in the US.

The one way to have the UK Pension paid directly into a US bank account is to provide the details of the US bank account to the UK Dept of Work and Pensions when you apply. The international bank account number (IBAN) and bank identification code (BIC) numbers are part of the details you will need to provide. This is convenient if you are using the pension only for expenses in US$. However due to the less than the best exchange rate used by the DWP you will get slightly less money than you would get by having the pension paid into a UK bank account in GBP and converting to US$ as needed. But if you don't already have a basic bank account in the UK it can be difficult or impossible to get one, especially when you are considered to be a "US person". In my case if I send money to someone in the UK or visit it is convenient to pay directly from the UK bank or use a UK debit Visa card and avoid the double exchange cost.

lansbury

As to the lump sum the document from HMRC on the subject says if you live in the US it depends on if you are a US citizen or not.

It changed with the "new" agreement in 2003/4 https://www.gov.uk/hmrc-internal-man...elief/dt19876a

fn-expat

According to the HMRC pages you gave the link for, the "new" agreement says that the US is now able to tax lump sums received by US citizens from UK schemes; specifically ---Under the old Agreement, a lump-sum payment from a pension scheme was taxable only in the country of residence. So if an individual moved from the US to the UK before receiving a lump sum from a US pension scheme, they would be taxable on the lump sum neither in the US (because of the treaty) nor in the UK (which does not tax lump sums anyway).The new provision prevents this occurring by providing that a lump-sum payment derived by a resident of one State from a pension scheme established in the other State shall be taxable only in that other State.The provision preserves the exemption from income tax of a lump sum relevant benefit where it is paid by a UK approved pension scheme to a beneficial owner who is a US resident. However, Article 1(4) will apply in respect of US citizens as the provisions of Article 17(2) are not amongst those listed at Article 1(5). So the US are able to tax lump sums received by US citizens from UK schemes.

Unless something else can be found that indicates this has changed again or is wrong, per the above HMRC information it appears that lump sums from UK schemes would be taxable in the US. UK State Pension lump sums differ from private pension lump sums in that the UK lump sums reflect arrears, whereas private pension lump sums are more in the nature of advances, but I still don't find anything that says one is US taxable but not the other.

lansbury

But only if the recipient is a US citizen under Article 1(4).

If they live in the US and are only UK citizens I read it that the lump sum isn't taxable Note it says resident and the bit about Article 1(4) which follows says US Citizen.

I understand HMRC to be saying if you are a UK Citizen living in the US the lump sum is tax free. If you have US Citizenship, even as a dual citizen, it is taxable.

lansbury

I think we might be a gross purposes. I am referring to a pension 25% lump sum not arrears accrued to the State pension.

fn-expat

Thanks for clarifying. It is weird because In just about every other case, resident US citizens and US permanent residents without US citizenship are treated the same for US taxes. The original post included a question was about the UK State Pension. I have no experience with private UK pension schemes, only state pensions from the UK, US and Canada plus a company pension from Canada. The advantage of receiving the UK state pension in the USA versus Canada is that's it's indexed, whereas in Canada it's frozen.

tht

celticgrid

I have found the dates provided to be....flexible. However, I have found that if it is on that 'progress' screen they do eventually get back to you, i.e. you will not remain unanswered forever, which is more than I can say for many organisations.

Jimbo99

[QUOTE=lansbury;12656495]If you want to avoid WEP you should not take SS before you have 30 years of qualifying contributions. If your wife's SS is based off of your account she will not be subjected to WEP.

Thanks for the response from all. Very helpful. The one question is when the 30th year counts to eliminate WEP. I will have achieved 30 years contributions early 2021. Do I need to wait until 2022 before claiming so that the 2021 year is counted? Or would it be as soon as I have achieved the necessary contribution in 2021. May be a bit pedantic but trying to work out when to start UK pensions, US SS, 401k withdrawals and selling shares.

lansbury

I would assume you could use the online WEP calculator when the time comes and that would for warn you if WEP still applied. Also when you call to claim SS if they say you are subject to WEP ask them when the 30 years will count from.

Russet

Well I checked back on the website today and nothing has been updated. 'Work not started' so I guess they didn't meet expectations!