Can I Transfer My UK Pension To The USA?
LEARNING OBJECTIVES
We’re passionate about providing high quality, up-to-date and relevant retirement advice to British Expats in the USA.
IN THIS ARTICLE, YOU WILL LEARN THE FOLLOWING:
How your UK pension works in the US
Why you can’t transfer to an IRA, or 401k
The best option for British Expats
How a UK to US pension transfer works
This article is intended for British Expatriates residing in the USA.
The UK and the USA have different rules and regulations regarding retirement accounts. In the UK, individuals receive tax-relief on contributions, as well as other notable benefits such as the 25% tax-free lump sum payment which is available at the age of 55.
In the US, there are various different retirement accounts available, notably the 401k, IRA and Roth IRA.
As these accounts do not follow the same benefits and legislation, they are not considered like for like.
This means one cannot be transferred into the other, whether that's transferring an IRA to the UK, or bringing your UK pension scheme to the US.
This article will explain and explore your best options as a UK Expat residing in the US.
UK To US Pension Transfer
So, if a UK pension cannot be transferred directly into the US, what are your options?
01 Do Nothing
You can of course leave your pensions exactly as they are. Some UK pension providers will allow you to take benefits as a US resident, however this is typically an exception.
The biggest issues of leaving your pension pot with traditional defined contribution UK providers (think Aegon, Aviva, Standard Life, Scottish Widows) is that these providers are set up to deal with UK residents only.
This means they may not provide full pension benefits to US residents. Common stipulations include:
No ability for full-flexible access draw-down: This means you may not be able to take money as and when you want, and instead will be restricted to fixed payments, or even just one lump sum payment. Flexibility in retirement is essential, especially when considering tax implications of taking large one-off payments.
No ongoing management: Many providers will no longer allow you to manage your accounts on an ongoing basis, or change the investments. UK regulated advisers do not have the regulatory permissions to manage your accounts when you live in the USA - as such you will need find an SEC regulated financial advice firm.
No multi-currency investments: UK pension schemes will not facilitate the holding of investments in USD. As such, this can expose you to currency risk, given your retirement pots will be held in GBP.
02 Transfer To A US SIPP (self-invested personal pension)
A US SIPP is a type of UK pension pot specifically designed for British Expats that live in the United States. By consolidating and transferring your pensions to a US SIPP, you can gain access to a wide range of investments, professional management, USD holdings, and perhaps most importantly, full flexible access-draw-down.
If your UK provider cannot offer any of the above, we would strongly encourage Expats to consider the US SIPP.
The International SIPP For US Residents
There are various US SIPPs available on the market, with over a dozen providers catering to US residents. We've compared the whole market, and you can see the costs, charges and benefits of each different provider here.
We would currently recommend the Novia Global SIPP for the majority of our clients. Check out a comprehensive analysis of the Novia Global International SIPP here.
Financial Guidance for UK Expatriates in the USA
The Wealth Genesis is fully authorized by the SEC to offer retirement guidance and wealth management solutions to UK expatriates in the US.All our advisers are dual qualified, with series 65 licenses and Level 4 UK diplomas, ensuring the highest quality advice to our clients.
We charge a flat-fee for all our independent advice, regardless of your wealth, objectives or personal circumstances. We are classed as a fiduciary, meaning we only act in the best interests of our clients. To understand more about our advice, see our guarantee here.
FAQs
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Most transfers can be completed between 1-3 months, providing all paperwork is completed correctly.
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The primary driver for utilising the US SIPP is the ability to access your retirement funds as and when you want, with no restrictions. On top of this, you also gain full control of the underlying investments and multi-currency options.
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UK financial advisers can only advise clients resident in the UK. To obtain regulated advice in the USA, you need to speak with an advice firm that is regulated by the SEC, such as ourselves.
