Living
in the USA, and having a UK pension plan has just become even a
greater problem due to additional IRS tax reporting. With mammoth
fines for not reporting a UK pension, you need to transfer your UK
pension to the US.
United
States (April 19, 2014) -- Living in the USA, and having a UK
pension plan has just become even a greater problem due to additional
IRS tax reporting. With mammoth fines for not reporting a UK pension,
you need to transfer your UK pension to the US.
The
problem is the only way to do this without creating a tax nightmare
is using a QROPS. Although there are fifteen registered QROPS schemes
in the USA. Only one is an open scheme, a non company sponsored
scheme. That is the Fidelity 401K.
The
Fidelity 401k is a HMRC registered QROPS. However the IRS see the
ability to transfer a UK pension to a 401K as a tax loophole. Given
this this avenue is closed indefinitely.
There
are solutions open for a USA resident and national to transfer to a
FATCA compliant QROPS.
A
QROPS transfer can provide the following benefits for a USA resident:
• No
UK income Tax liability on pension income. UK pensions are taxed at
source. QROPS is not subject to UK tax.
• QROPS
allows your assets to be structured in USD, with income paid in USD.
This can be paid to a USA bank account, in USD. A UK pension must be
paid in GBP. This leaves you open to currency rate fluctuations
outside of your control. QROPS allows you to take control back.
• No
need to buy an annuity or ASP (Alternatively Secured Pension) at age
75. This affords you greater control. Your existing UK provision may
lead you to take a low rate of return. For example, once a fixed
annuity of 3.5%pa is purchased by your UK scheme that would then be
your return for life. Your QROPS pension could pay you an income of
10%pa. It also allows your fund to continue growing whilst you take
an income. Which can then provide a higher pension income in later
years. This is an important factor to hedge against the effect of
price inflation on your pension income.
• No
Tax liability on your pension fund assets as they continue to grow.
Assets in your UK pension fund are subject to Tax, both in the UK and
in the USA. Once transferred you’re fund is not subject to Tax, and
continues to grow Tax free.
• A
far wider range of investments, ranging from cash, unit trusts,
shares, commodities, gold, ETF’s, commercial property (including
overseas property) and much more.
• Fully
portable from country to country.
• You
are able to leave the remainder of your pension fund to your heirs on
your death. As most people will choose a single Annuity, once in
receipt; your UK pension has no value that can be passed to your
partner or children. Whereas your QROPS pension can be left to
whoever you wish.
• If
not vested in an Annuity on your death your pension fund is subject
to a 55% tax charge in the UK. A QROPS would pass the total value to
your beneficiaries and is not subject to this tax charge.
• A
QROPS allows access to benefits from age 50 if you have been outside
the UK for 5 tax years or more.
• A
QROPS allows access to 30% Cash Lump Sum from age 50 if you have been
outside the UK for 5 tax years or more. This is 5% more than allowed
under UK pension legislation.
• Pension
rights transferred into a HMRC Approved QROPS are protected from UK
inheritance tax.
• By
moving UK pension benefits to a HMRC Approved QROPS, assets are
effectively removed from the UK tax net. For many expatriates the
avoidance of UK taxes on pension income and the dangers of additional
pension tax levies are an important planning consideration.
Also
the treatment of UK pensions under the UK/USA DTA (Double Taxation
Agreement) is not good. The UK Government tax interest on your fund
before you get it, and the IRS tax the interest on your fund once you
have had it. The IRS also tax any Tax Free Lump Sum if you are a US
Citizen. If you could move your UK pension to the US, you would be so
much better off. Problem is you cannot move a UK pension to the
States.
There
is a website dedicated to offering advice on QROPS transfers for USA
residents and nationals. (http://www.qropsusa.biz)
Moving
your UK pension arrangements to a QROPS if suitable given your own
particular circumstances, can only improve your position.
Most
importantly, once moved to a QROPS
you have control over your money. If left in your UK pension
arrangements it is highly likely that additional constraints will be
put in place which will adversely affect you.
To
find out more, contact: info@qropsusa.net
or visit their website: http://www.qropsusa.biz.
Media
Contact:
Kevin
Jacks
QropsUSA.biz
+44
(0)7897447340
