Transfer UK Pension To US | The Guide For US Residents
LEARNING OBJECTIVES
We provide high quality and up-to-date financial information to US Residents.
IN THIS ARTICLE, YOU WILL LEARN THE FOLLOWING:
The rules for transferring your UK Pension to the US
Why you can’t transfer to an IRA or 401k Account
How much a UK to US Pension Transfer should cost
Best practise when speaking with Expat Financial Advisors
How to transfer your UK Pensions for a flat-fee
This guide is for individuals who have relocated from the United Kingdom to the United States.
Many expatriates retain pension accounts from their time in the UK, whether through workplace scheme or personal pensions - these can often be large pension pots that require careful planning.
The process of managing your UK pensions while residing in the US involves understanding the options available for transferring, consolidating, or accessing these funds in accordance with both UK and US financial regulations.
Failure to properly address UK pensions in the US can result in missed opportunities for growth, tax implications, and potential challenges in retirement planning.
Can I Transfer my US Pension to US 401K?
Unfortunately, there is no possibility of transferring your UK pension to your US 401K.
The UK only allows pension transfers to international schemes that broadly follow the rules of UK pension plans. This means they need to offer similar benefits and restrictions to be a receiving scheme. These features include:
Pension Commencement Lump Sum (25% PCLS payment, or tax-free cash payment)
Flexi-access draw-down in retirement
Ability to only access funds from the age of 55
Income taken taxed at your marginal rate of tax (unlike Roth IRAs for example)
Transfers and payments to report back to HMRC
Given the US retirement schemes vary significantly from typical UK schemes, HMRC does not allow UK pension transfers directly into a 401k.
Can I Transfer UK Pension to IRA?
For the same reasons as above, you cannot transfer a UK pension to an Individual Retirement Account in the US.
UK to US Pension Transfer
At the time of writing, the only viable option for US residents is to transfer and consolidate their UK pensions into an International SIPP account. An International SIPP account is a purpose built vehicle which is designed to allow Expats and former British residents to manage and access their pensions in the US, and elsewhere.
The International SIPP provides the following benefits to US residents:
Full-flexible access draw-down in retirement from age 55.
Wide investment choice and ongoing portfolio management, whether self-selected or with an Expat Financial Advisor.
Ability to hold the entirety, or some, of your UK pension assets in US dollars, meaning investors can mitigate against the potential currency risks.
Fully regulated pension accounts that are protected by the Financial Services Compensation Scheme (FSCS), and falling under the robust regulatory requirements of the Financial Conduct Authority (FCA)
Low-cost, portable and flexible accounts when compared to leaving pensions in UK standard schemes.
US International SIPP Transfer
To transfer to an International SIPP, the first step is to speak with an SEC regulated advisor who also has an understanding of the UK pension system.
We encourage all US residents to conduct thorough due-diligence when speaking with firms, and encourage the following questions to be asked for best practise:
Are you regulated, and who by?
How much do you charge for the service, both initially and ongoing?
Are there any commission payments, or lock-ins?
Can I leave or move my pension at no cost if I am unhappy with the service?
Finally, be sure to check the adviser you choose to work with has the relevant qualifications, as well as appearing on the SEC register with a Series 65.
US Expat Financial Advice with The Wealth Genesis
The Wealth Genesis is a modern approach to working with an Expat Financial Advisor. We charge a flat-fee for all our advice, whether it's transferring a large UK pension or consolidating several smaller pots. We also charge an industry leading low annual management fee of 0.85%.
Transferring your pension shouldn't cost a large percentage of your funds. High fees are a proven head-wind to wealth generation.
To learn more about how we work with our clients, see Why Us?
Best International SIPP for US Residents | Our Verdict
In our opinion, the Novia Global SIPP is the best solution for US residents looking to consolidate their UK assets. It's the lowest cost International SIPP available on the market, and allows investors full control of their assets and access to low cost ETFs, mutual funds and alternatives. Click here to see our full review of the Novia Global SIPP
To arrange an initial free consultation with an SEC registered adviser at The Wealth Genesis, follow the button below to get started.
FAQs
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Many advisers charge on a percentage or commission basis. This is typically between 1% and 5% of the pension value that is being transferred.
The Wealth Genesis charges a flat-fee for all our advice and wealth planning. -
US residents used to be able to access QROPS accounts to transfer their pensions. However, these can be subject to the Overseas Transfer Charge, which can trigger a very large tax penalty from HMRC.
They are also typically much more expensive to run on an ongoing basis. -
There are many International SIPPs on the market. Others include PSG, Hartley, STM and iPensions.
The Novia Global SIPP is cheaper than all of the above and has the best investment platform to utilise in conjunction with the pension. -
No, the 25% PCLS payment is tax-free in the UK only.
This is a common query, and we encourage all clients to speak with their local US tax adviser, as the exact treatment can vary between states.
