UK state pension and USA social security
Apr 5th 2015, 7:52 pm
#706
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Joined: Apr 2011
Location: Ohio
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Re: UK state pension and USA social security
UK private pensions are not taxable when paid to a US resident, be that a US citizen or resident alien. You file a US Individual 2002 form and the UK pension will pa paid gross, no UK tax withheld. The UK tax allowance is not applicable because the income itself is UK tax free and there is no need to file a UK self assessment.
Apr 5th 2015, 7:53 pm
#707
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Joined: Aug 2004
Posts: 4,754
Re: UK state pension and USA social security
I found this IRS definition of "lump sum" under topic 412...
"A lump-sum distribution is the distribution or payment within a single tax year of a plan participant's entire balance from all of the employer's qualified plans of one kind (for example, pension, profit-sharing or stock bonus plans). Additionally, a lump-sum distribution is a distribution that is paid:
Because of the plan participant's death,
After the participant reaches age 59½,
Because the participant, if an employee, separates from service, or
After the participant, if a self-employed individual, becomes totally and permanently disabled."
I understand Para 2 is not exempted from the saving clause but it doesn't need to be as the 25% payment is not the "entire balance".
"A lump-sum distribution is the distribution or payment within a single tax year of a plan participant's entire balance from all of the employer's qualified plans of one kind (for example, pension, profit-sharing or stock bonus plans). Additionally, a lump-sum distribution is a distribution that is paid:
Because of the plan participant's death,
After the participant reaches age 59½,
Because the participant, if an employee, separates from service, or
After the participant, if a self-employed individual, becomes totally and permanently disabled."
I understand Para 2 is not exempted from the saving clause but it doesn't need to be as the 25% payment is not the "entire balance".
Apr 5th 2015, 8:00 pm
#708
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Joined: Aug 2004
Posts: 4,754
Re: UK state pension and USA social security
To add to the discussion the SSA seems to treat pensions such as the one in the UK as follows for WEP purposes in their POMS manual:
"4. Unique payments
When an employer or pension-paying agency allows an individual who is eligible for retirement or disability benefits to determine the disbursement amount, the duration of the pension or the start date, WEP is applicable when the individual first becomes entitled to the pension per RS 00605.360B.3. Treat the pension as a lump sum and follow the instructions in the next subsection RS 00605.364C.5."
Ie as a lump sum.
This is not enshrined in law nor do I know if this has been added recently or not. However it does provide some clear evidence of how the US intends to treat these UK pensions. Whether that is correct or not is still up for debate. And whether the IRS takes this view is also unknown.
Do also note that the definition for lump sum in the US is in respect to qualified retirement plans. Since UK pensions are not qualified and US qualified pensions wouldn't allow tax free payments like that there is also an argument to say that the definition doesn't apply to uk pensions.
"4. Unique payments
When an employer or pension-paying agency allows an individual who is eligible for retirement or disability benefits to determine the disbursement amount, the duration of the pension or the start date, WEP is applicable when the individual first becomes entitled to the pension per RS 00605.360B.3. Treat the pension as a lump sum and follow the instructions in the next subsection RS 00605.364C.5."
Ie as a lump sum.
This is not enshrined in law nor do I know if this has been added recently or not. However it does provide some clear evidence of how the US intends to treat these UK pensions. Whether that is correct or not is still up for debate. And whether the IRS takes this view is also unknown.
Do also note that the definition for lump sum in the US is in respect to qualified retirement plans. Since UK pensions are not qualified and US qualified pensions wouldn't allow tax free payments like that there is also an argument to say that the definition doesn't apply to uk pensions.
Apr 5th 2015, 8:03 pm
#709
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Joined: Aug 2004
Posts: 4,754
Re: UK state pension and USA social security
Basically yes. The US International 2002 adjusts your tax code to NT on the relevant accounts, be they annuities or drawdown
Apr 12th 2015, 10:54 pm
#710
Joined: Apr 2005
Location: Milwaukie, Oregon
Posts: 9,966
Re: UK state pension and USA social security
Online application submitted for social security. Let battle begin that the Government Service Offset only applies to US government jobs and not jobs outside the US. If I lose that argument I will not get any social security.
Apr 14th 2015, 6:16 pm
#711
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Joined: Feb 2013
Location: Los Angeles
Posts: 158
Re: UK state pension and USA social security
Apr 14th 2015, 6:35 pm
#712
Joined: Apr 2005
Location: Milwaukie, Oregon
Posts: 9,966
Re: UK state pension and USA social security
What about GPO???
http://www.ssa.gov/pubs/EN-05-10007.pdf
http://www.ssa.gov/pubs/EN-05-10007.pdf
Apr 14th 2015, 6:43 pm
#713
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Joined: Feb 2013
Location: Los Angeles
Posts: 158
Re: UK state pension and USA social security
I hope the new minimum will at least offset that reduction. How about you nun, did you make it before the deadline?
Apr 14th 2015, 6:55 pm
#714
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Joined: Feb 2013
Location: Los Angeles
Posts: 158
Re: UK state pension and USA social security
Apr 14th 2015, 8:34 pm
#715
Joined: Apr 2005
Location: Milwaukie, Oregon
Posts: 9,966
Re: UK state pension and USA social security
I ticked the box no I don't receive a government pension, but put in the comments that I received a pension from the Metropolitan Police Service, London, England and that for the purposes of a SS application I didn't believe that was classed as a government pension. My argument being that for 23 out of the 30 years I served the Met was overseen by the Home Office and therefore it is a foreign Federal pension. Clutching at straws but you have to give it a try.
Apr 14th 2015, 8:59 pm
#716
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Joined: Feb 2013
Location: Los Angeles
Posts: 158
Re: UK state pension and USA social security
Interestingly, when you look at the SSA's GPO calculator there are only two numbers they require, one is the amount of the spousal SS benefit, the other is the gross monthly government pension amount of the spouse claiming the spousal benefit. So as it doesn't ask for your "Gov Pension" I'd say there will be no GPO as your spouse does not have a Gov Pension!!!
Calculators: GPO Calculator
Ooops, just read your post #697 and realized it is you that is claiming spousal benefit on your spouse's US SS contributions, so if the SSA consider your Met Police Pension a government pension they will GPO your spousal benefit.
Calculators: GPO Calculator
Ooops, just read your post #697 and realized it is you that is claiming spousal benefit on your spouse's US SS contributions, so if the SSA consider your Met Police Pension a government pension they will GPO your spousal benefit.
Last edited by Disenchanted; Apr 14th 2015 at 9:17 pm.
Apr 16th 2015, 7:55 pm
#717
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Joined: Feb 2013
Location: Los Angeles
Posts: 158
Re: USA social security WEP
I just found this little gem and was wondering if I was delusional? I'm sure it's too good to be true, but, you never know about these things, so I'm hoping it's as simple as it seems!!!
From http://www.socialsecurity.gov/pubs/EN-05-10069.pdf
How much can you earn and still get benefits?
If you were born January 2, 1943, through January 1, 1955, then your full retirement age for retirement insurance benefits is 66.
If you work, and are full retirement age or older, you may keep all of your benefits, no matter how much you earn.
If you’re younger than full retirement age, there is a limit to how much you can earn and still receive full Social Security benefits.
I currently work for City Government and will have a US Civil Service Pension plus a UK Defined Benefits Pension and a UK NI Pension, so being WEP'd $400+ on my US SS pension in retirement is inevitable.
I was born in 1951 so my full retirement age is UK/65, USA/66, I plan on working until I'm 67y 8mo. Based on the above I can draw my full US SS pension at 66 and if I'm still working my City job my SS benefit will NOT be reduced until I do retire.
Based on what the SSA say I believe the best plan would be to collect my US SS at 66? Should I also take my UK pension at 65, bearing in mind that I'm going to be in the "new pension" scheme so will only get 5.8% if I defer and not the 10.5% I was initially thought I would get?
Greg.
From http://www.socialsecurity.gov/pubs/EN-05-10069.pdf
How much can you earn and still get benefits?
If you were born January 2, 1943, through January 1, 1955, then your full retirement age for retirement insurance benefits is 66.
If you work, and are full retirement age or older, you may keep all of your benefits, no matter how much you earn.
If you’re younger than full retirement age, there is a limit to how much you can earn and still receive full Social Security benefits.
I currently work for City Government and will have a US Civil Service Pension plus a UK Defined Benefits Pension and a UK NI Pension, so being WEP'd $400+ on my US SS pension in retirement is inevitable.
I was born in 1951 so my full retirement age is UK/65, USA/66, I plan on working until I'm 67y 8mo. Based on the above I can draw my full US SS pension at 66 and if I'm still working my City job my SS benefit will NOT be reduced until I do retire.
Based on what the SSA say I believe the best plan would be to collect my US SS at 66? Should I also take my UK pension at 65, bearing in mind that I'm going to be in the "new pension" scheme so will only get 5.8% if I defer and not the 10.5% I was initially thought I would get?
Greg.
Apr 16th 2015, 8:02 pm
#718
Joined: Apr 2005
Location: Milwaukie, Oregon
Posts: 9,966
Re: UK state pension and USA social security
That refers to what you can earn. If you are reading into it you will not be WEP'd until you retire I think you are wrong. The WEP will kick in when you receive both SS and UK State pensions. Pensions are not earnings.
Apr 16th 2015, 8:42 pm
#719
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Joined: Mar 2015
Posts: 78
Re: UK state pension and USA social security
I think GPO is supposed to be US government pensions only. From their POMS manual:
1. Government
Government means:
Federal - The United States Government, including military service (see RS 01901.480) and Federal Judges receiving a full salary benefit. Foreign pensions do not cause offset.
State - The 50 States, the District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, Guam, American Samoa, and Northern Mariana Islands.
Local - A political subdivision (see RS 01505.001B) including wholly owned instrumentalities (does not include interstate instrumentalities - RS 01505.005B).
1. Government
Government means:
Federal - The United States Government, including military service (see RS 01901.480) and Federal Judges receiving a full salary benefit. Foreign pensions do not cause offset.
State - The 50 States, the District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, Guam, American Samoa, and Northern Mariana Islands.
Local - A political subdivision (see RS 01505.001B) including wholly owned instrumentalities (does not include interstate instrumentalities - RS 01505.005B).
Apr 16th 2015, 9:43 pm
#720
Joined: Apr 2005
Location: Milwaukie, Oregon
Posts: 9,966
Re: UK state pension and USA social security
I think GPO is supposed to be US government pensions only. From their POMS manual:
1. Government
Government means:
Federal - The United States Government, including military service (see RS 01901.480) and Federal Judges receiving a full salary benefit. Foreign pensions do not cause offset.
State - The 50 States, the District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, Guam, American Samoa, and Northern Mariana Islands.
Local - A political subdivision (see RS 01505.001B) including wholly owned instrumentalities (does not include interstate instrumentalities - RS 01505.005B).
1. Government
Government means:
Federal - The United States Government, including military service (see RS 01901.480) and Federal Judges receiving a full salary benefit. Foreign pensions do not cause offset.
State - The 50 States, the District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, Guam, American Samoa, and Northern Mariana Islands.
Local - A political subdivision (see RS 01505.001B) including wholly owned instrumentalities (does not include interstate instrumentalities - RS 01505.005B).
