Transfer of US pension pot to the UK?

AllNightDiner

Morning all, 

My SO worked for a few years in the US and contributed to the TIAA-CREF retirement scheme. He will be able to access the money in just over 3 years when he turns 60.

We have no plans to move back to the US and so he is wondering whether that pension pot can be transferred to a UK account (eg HL, USS or other)?

Thanks for any thoughts.

EdSwippet

AllNightDiner said:

We have no plans to move back to the US and so he is wondering whether that pension pot can be transferred to a UK account (eg HL, USS or other)?

Nope. The US does not permit QROPS transfers out (nor in, realistically). Just draw it down as required as a normal pension when it becomes available.

TIAA-CREF will probably only pay into a US account, and that can create practical difficulties. A Wise multi-currency account is a useful option here. As for tax ... the US/UK tax treaty reserves tax rights to the UK, so no need for any US tax filings. The one exception is if you take it all as a 'lump sum'; here the treaty reverses this, so that the lump sum is taxable only to the US.

OldMusicGuy

Like Ed said, you cannot transfer a US pension to a UK pension. I had a US 401K pension and once I reached 59 1/2 I took it out as a lump sum. Again, Ed is correct that lump sum withdrawals are subject to US tax not UK tax, whereas regular pension withdrawals from a US pension are taxed in the UK. I took a lump sum as my tax liability was lower in the US compared to the UK if I took it as several regular payments, especially as I only worked there for a few years. But your SO will need to consider his UK and US tax position to make the best choice, and also his ability to fill out a US tax return if he goes down that path. I did this myself and did not find it too hard but I am pretty adept with from filling and understanding legislation.

I did this 5 years ago, it's probably worth checking what the latest situation is. There are some good forums for expats which can be helpful. 

IIRC there was also a grey area about irregular lump sum withdrawals, that is you take an amount out in year 1, then take more out in (say) year 4 compared to taking monthly or annual regular withdrawals. But unless the amount is large I think the biggest decision is does your SO want to be taxed in the UK or the US which will then drive the withdrawal strategy.  

bostonerimus

EdSwippet said:

AllNightDiner said:

We have no plans to move back to the US and so he is wondering whether that pension pot can be transferred to a UK account (eg HL, USS or other)?

Nope. The US does not permit QROPS transfers out (nor in, realistically). Just draw it down as required as a normal pension when it becomes available.

TIAA-CREF will probably only pay into a US account, and that can create practical difficulties. A Wise multi-currency account is a useful option here. As for tax ... the US/UK tax treaty reserves tax rights to the UK, so no need for any US tax filings. The one exception is if you take it all as a 'lump sum'; here the treaty reverses this, so that the lump sum is taxable only to the US.

There was a time when TIAA-CREF were ok paying into foreign accounts because it was not uncommon for academics to move around the world and retire outside the USA. However, that has probably changed. A phone call will help to clear things up.

OldMusicGuy

My US pension provider just did a USD wire transfer to my bank, no problem at all. Obviously had to pay some fees but nothing excessive.

AllNightDiner

Thanks very much - really useful replies.