US Residents With UK Pensions | Common Questions

This article is intended for US residents who hold UK pensions.

Moving to the USA can bring plenty of excitement and new opportunities, but what happens to your UK pensions?

Many British expats in the US ask us about managing their pensions, from accessing their tax-free lump sum to figuring out whether they should transfer their pension pot to the US system. 

The key is to be informed over cross-border legislation so you can enjoy a comfortable, stress-free retirement and make the most of your savings.

Whether you're planning for the future or already getting ready to retire, understanding your UK pension options in the US is essential for financial peace of mind.

Can I Take My 25% Tax Free Pension Lump Sum In The US?

A Common question is whether you can still take 25% of your UK pension pot as a tax-free lump sum. Any UK pension provider will pay this out to you tax-free, however it still may need to be declared locally in the States.

Thanks to the double taxation treaty between the UK and the US, youโ€™re still entitled to this benefit even after you move across the Atlantic. That means you can access a quarter of your pension without paying tax, just like you would in the UK. This can be taken from the age of 55 (57 from April 2028), although some defined benefit schemes will only allow this from the age of 65.

The remaining 75% of your pension will be treated as taxable income in the US and subject to standard income tax rates, so itโ€™s important to seek advice from a US-regulated adviser and plan ahead to understand your tax implications.

How Does The IRS Tax My UK Pension?

Fortunately, the US-UK tax treaty is designed to prevent you from being taxed twice on your pension income. This means that once you become a US tax resident you wonโ€™t have to pay UK tax to HMRC on your UK pension payments, and instead you will need to report all pension income to the IRS and pay US income tax. 

To ensure HMRC doesnโ€™t mistakenly tax you, itโ€™s important to inform them once you become a US tax resident. If any UK tax is automatically applied (for example, on lump sum withdrawals), you may be able to claim a Foreign Tax Credit (FTC) in the US to offset it.

Navigating these tax rules can be complex, so working with a cross-border tax adviser is essential to ensure youโ€™re making the most of your pension whilst remaining tax-efficient.

Can I Move My UK Pension To An IRA Or 401k In The US?


Transferring your UK pension overseas can be a challenging process, and for UK expats in the US, itโ€™s even more complex, as HMRC only allows UK pension transfers into a Qualifying Recognised Overseas Pension Scheme (QROPS). 

A number of criteria need to be met for an international scheme to qualify for QROPS status, and unfortunately there are currently no IRA or 401(k) plans in the US which meet these strict requirements. 

If you transfer your pension to a scheme that isnโ€™t QROPS-approved, you could face a staggering 55% tax charge. Furthermore, new QROPS rules introduced in the Autumn Budget 2024 mean that UK expats can no longer transfer their pensions to offshore QROPS schemes, like those in Malta or Gibraltar, unless they actually live there. Otherwise, theyโ€™ll be hit with a 25% Overseas Transfer Charge on the entire pension pot. 

This leaves UK expats in the US, without any options to transfer their UK pension schemes to US equivalent retirement accounts. Fortunately, there are better solutions available, such as the International SIPP.

The International SIPP | The Pension Solution for UK Expats In The US


The International SIPP (Self-Invested Personal Pension) is an ideal solution for UK expats living in the USA. Just like a traditional SIPP, this pension scheme allows you to manage your pension with full control and flexibility, but itโ€™s been specifically designed for expats.

As the scheme remains in the UK, it is registered with HMRC and regulated by the FCA, giving you peace of mind that your pension is safe and secure. An International SIPP is perfect for those who want to manage their pension seamlessly from the US, while also having the opportunity to grow their wealth with a strong investment component. 

This is a solution which provides the key features UK expats need to secure their financial future in America, including:

Ability to Hold and Invest in USD


With the ability to hold investments within the SIPP in multiple currencies, including USD, you can mitigate the currency risk that comes with frequently transferring from GBP and protect your pension funds from currency fluctuations.

Wide Range of Investment Options

Not only will you have complete control of the investments held within your International SIPP, but access to a wide array of investment opportunities, including stocks, funds, ETFs and bonds.This will allow you to build a diverse investment portfolio and grow your retirement funds over time.

Full-Flexibility

The international SIPP gives you access to your pension savings on your own terms, with fully flexible drawdown options, including regular payments, lump sums or ad hoc - meaning you can tailor your pension payments to your needs.

For more information, visit our dedicated International SIPP page

UK To US Pension Transfer Specialist

Navigating the financial complexities of life as a British expat in the US can feel overwhelming, but managing your pension doesn't have to be complicated.

At The Wealth Genesis, our advisers specialise in helping UK expats move their pensions to the UK, and we are fully regulated to give advice in both countries.

To learn more about how we can help with your pension management, book a free discovery call with us today using the diary below.

Next
Next

Assurance Vie For US Expats In France