Pension transfer from UK to USA

Littleblackdog47

Hi there, I have an ITV DB pension only 7 years old therefore worth about 30,000 but transfer offered at 86,000 plus an Aegon scheme worth about 29,000. Have been discussing with a company called Alexander Peter Wealth management about transferring to a SIPP over here in the USA and have gone through much paperwork! They now have me speaking to a company called Purely Pensions who want 3000 out of me for compliance check which by the FSA rules has to be done on any pension worth over 30,000 and there is also a company called Beacon Global Advisors on board too! Has anyone had issues with any of these companies? Thanks in advance, Dom

[Deleted User]

No but this rings alarm bells. Extreme caution is required. 

When you say “worth 30k but 86 offered”, where did you get the 30K number? 

Read this: https://www.gov.uk/guidance/check-the-recognised-overseas-pension-schemes-notification-list#countries-s-to-z

I do not like HMRC wording to the extent that I wouldn’t even try. In fact, I have not. 

bostonerimus

Littleblackdog47 said:

Hi there, I have an ITV DB pension only 7 years old therefore worth about 30,000 but transfer offered at 86,000 plus an Aegon scheme worth about 29,000. Have been discussing with a company called Alexander Peter Wealth management about transferring to a SIPP over here in the USA and have gone through much paperwork! They now have me speaking to a company called Purely Pensions who want 3000 out of me for compliance check which by the FSA rules has to be done on any pension worth over 30,000 and there is also a company called Beacon Global Advisors on board too! Has anyone had issues with any of these companies? Thanks in advance, Dom

You've been told many times that it is impossible to transfer a UK pension to the US and maintain any tax advantages. If you continue on this rash path (I'm being polite) you will pay large amounts in fees and taxes. The vultures are circling and you have only yourself to blame if you allow them to feed. I have no idea what your UK pension is worth because your descriptions of it are opaque. Leave it where it is and it will be protected by the US/UK tax treaty. HMRC compliance is not the issue here, as you are in the US it's the IRS rules that matter and an international transfer might well leave you with a large US tax bill.

Littleblackdog47

Bostonerimus Being polite, it says in my post the value is 30,000 or are you so busy commenting on everything you don't read! 
                        Transfer your UK pension to the US

It is possible to transfer your UK pension into a US retirement plan, but only in very limited set of conditions. Under current USA legislation, you won't be able to transfer your UK pension to a 401k.

Mordko, Value of ITV pension is 30000 sterling with a transfer value of 86000 been offered by ITV.

dunstonh

Bostonerimus Being polite, it says in my post the value is 30,000 or are you so busy commenting on everything you don't read! 

It says  in post #1 "worth about 30,000 but transfer offered at 86,000 "    There are no values on a DB scheme other than the CETV.   Your post is confusing.

bostonerimus

Littleblackdog47 said:

Bostonerimus Being polite, it says in my post the value is 30,000 or are you so busy commenting on everything you don't read! 
                        Transfer your UK pension to the US

It is possible to transfer your UK pension into a US retirement plan, but only in very limited set of conditions. Under current USA legislation, you won't be able to transfer your UK pension to a 401k.

Mordko, Value of ITV pension is 30000 sterling with a transfer value of 86000 been offered by ITV.

Can you explain what "value of 30k" means, is this how much has been contributed or the value of some future benefit?
Can you describe the circumstances that allow the transfer of a UK pension plan to a US retirement plan in a tax efficient manner? If not a 401k then what US structure?

Littleblackdog47

Dunstonh yes, the transfer value of 86000 sterling is what they have offered me should I pull out of scheme

Bostonerimus ITV have offered me 86,000 should I transfer via QROPS or to a SIPP fund here in the USA. 30,000 sterling is the current value of fund so they offer more as it's better for them in the long run.

xylophone

https://www.atlanticawealth.com/can-i-transfer-my-uk-pension-to-my-us-401k/

There is a suggestion in the above that a transfer to an international SIPP could be an option.

Discussed in link below.

https://cameronjamesusa.com/international-sipp/

p00hsticks

Littleblackdog47 said:

ITV have offered me 86,000 should I transfer via QROPS or to a SIPP fund here in the USA. 

30,000 sterling is the current value of fund so they offer more as it's better for them in the long run.

This is confusing me. Your initial post says that this is a DB (Defined Benefit) pension - therefore there is no 'fund' - just a promise to pay you a certain regular amount from pension age until you die, possibly with a commencement lump sum.

86,000 appears to be the CETV (Cash Equivalent Transfer Value).

What does the £30,000 represent exactly ?.

bostonerimus

Littleblackdog47 said:

Dunstonh yes, the transfer value of 86000 sterling is what they have offered me should I pull out of scheme

Bostonerimus ITV have offered me 86,000 should I transfer via QROPS or to a SIPP fund here in the USA. 30,000 sterling is the current value of fund so they offer more as it's better for them in the long run.

The IRS does not recognize your UK pension fund under IRS regulations nor QROPs nor SIPPs and I believe HMRC now places a high tax on QROPS transfers. These are all meaningless to the IRS. So what is the US structure? FYI it is only possible to do a tax efficient retirement fund transfer to a US retirement fund from another US retirement fund. You might be able to transfer your UK based pension fund to one outside the UK, but as a US resident you won't avoid US taxation as cross border pension "rollovers" are not covered by the US/UK tax treaty as explained here:

https://www.irs.gov/pub/irs-wd/10-0151.pdf

You might be able to do a tax efficient transfer to a UK SIPP (although even that is debatable as explained in the above pdf also, and you should talk to an impartial US/UK tax expert before doing this), but regular providers will probably baulk at you being US resident and so you will need a "boutique" solution which will probably involve high fees. You need to do a comparison of the potential future retirement date value of your DB pension and any DC pension you are considering as a starting point, but forget about transfers to USA and please understand the potential tax consequences. I'm a US resident and if I ever return to the UK I will leave all my US retirement accounts in place, because of the protection the have under the US/UK tax treaty, and just move the taxable cash withdrawals.

One more bit of advice, if you qualify to pay Class 2 NI please apply and pay as many years as you can. It's the best retirement benefit ever!

[Deleted User]

Littleblackdog47 said:

Mordko, Value of ITV pension is 30000 sterling with a transfer value of 86000 been offered by ITV.

Sorry, still don’t understand what you mean by “value of ITV pension”. 

What is the annual pension benefit you are supposed to get after retirement? (I am guessing the answer to my question is not “30K”).

Its hypothetically possible that something changed recently or that you are in a unique position and there is a reasonable way of transferring pensions is available in your case (although I really doubt it).  Have you been provided with a step by step process and references to applicable US tax laws which will be used to bring in these funds? Do you know where the money will end up?  

How did you come across these pension transfer advisors?  There are a lot of unscrupulous people in the financial industry and a decent proportion keeps contacting UK expats with wonderful ideas about pension transfers.