Can I Transfer My UK Pension To My US 401k?
LEARNING OBJECTIVES
We provide high quality, relevant and up-to-date retirement advice to British Expats in the USA.
IN THIS ARTICLE, YOU WILL LEARN THE FOLLOWING:
Why you can’t transfer a UK pension to a US retirement account
Questions to ask your existing UK pension provider as US resident
The best retirement account for US residents with UK accounts
How to transfer to a US SIPP
This article is intended for US residents with UK pension schemes.
Cross border financial planning can be incredibly complex, with different countries operating under different rules.
A very common query for US residents is what happens to their UK pensions when they move to the USA, and whether or not they can transfer them directly into their 401K or IRA accounts.
In short, the answer is no. You cannot transfer a UK pension pot into a US retirement account. This is because HMRC only permits UK pensions to be transferred to accounts that are considered like-for-like, or share commonality.
Whilst tax treaties exist between the UK and the US for income taxes, this does not extend to retirement accounts.
UK pensions can be accessed from age 55. IRA accounts can be accessed from age 59 and a half. UK pensions permit a 25% tax free withdrawal, US accounts do not. These are just some of the main differences that make direct transfers unavailable to British Expats in the US.
So, How Does My UK Pension Work In The US?
Your UK pension will continue to stay with your provider, and continue to be invested accordingly. However, as a US resident, you will likely lose access to some key retirement benefits that are only available to US residents with pension funds, most importantly:
No flexible access draw-down in retirement
No multi-currency options or ability to invest your retirement plan in USD
No professional ongoing management, or even self-management
No access to tax-free lump sum
If any of these conditions apply, which they do to most UK pensions, we would advise US residents to consider transferring to a vehicle specifically built for them, the US SIPP (International SIPP)
International SIPP For US Residents
The International, or US SIPP provides US residents with all the retirement benefits they could possibly need. As a purpose built pension pot, it will give you full access to your UK pensions, allow you to consolidate your UK accounts, as well as giving you the ability to invest your retirement account in USD to protect against currency risk.
There are many International SIPP providers available - for a full breakdown, see our International SIPP comparison article, as well as our verdict on the best International SIPP for US residents.
Financial Advice For British Expats In The USA
The Wealth Genesis is regulated by the SEC to provide investment and retirement advice to US residents. All our advisers are dual qualified, with US Series 65 qualifications alongside UK Level 4 qualifications, ensuring the best quality of advice and expertise to our clientele.
We are fully independent and do not sell products or charge percentage commissions. We charge a flat initial pension transfer fee of £3,000 to all clients regardless of the value of their pensions. We charge an industry leading 0.85% per annum for full account management, ensuring less drag on your portfolio and helping to secure your retirement abroad.
To understand how we can help you, contact us today using the button below.
FAQs
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You can, however you may lose access to some very important retirement benefits - most notably the ability to take money out as and when you please.
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The pension commencement lump sum payment is tax-free in the UK, not the US. We strongly advise clients to speak with their local tax adviser to ascertain their position, as this can very state-to-state and dependent on individual circumstances.
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We start with an initial discovery call with our clients, where we listen and understand what drives you and your decision making. Following this Discovery, we prepare a bespoke Wealth Report, detailing our recommendations and investment advice. If you are happy with this, we then begin to set up your new accounts and execute the UK to US pension transfer.
