The US SIPP

This type of SIPP is a flexible type of pension plan that UK Expats can utilise as a US resident to maximise their retirement benefits.

As a US resident, traditional pension plans, like those offered from Aviva, Scottish Widows, Standard Life etc. may no longer offer you all of the flexibility you require in retirement. In this instance, the SIPP for US residents can be used as an alternative retirement account.

What is a USA SIPP?

An American International SIPP is a UK registered, HMRC approved self-invested personal pension scheme which is specifically built to provide full retirement benefits to US citizens and residents. Being based in the UK still, this SIPP is still fully regulated by the Financial Conduct Authority (FCA) and fully covered by the Financial Services Compensation Scheme (FSCS), meaning it is just as protected as your existing UK pensions.

How Can I Use The SIPP For US Residents?

The American SIPP is used as a vehicle to transfer and consolidate your existing UK pensions into. So, for example, if you have UK occupational pension schemes or personal pension pots that you wish to manage and consolidate, you can open up an International SIPP and have all of your pensions consolidated into one manageable pot which is purpose built for US residents.

What Benefits Can I Get From The US International SIPP?

Below we list the key benefits that you can receive from transferring your UK pensions to an International SIPP:

  • Full flexibility in income payments, meaning you can draw-down your funds as and when you please, as opposed to being forced to take an annuity, or cash in the entirety of you pension.

  • Wider investment choices, with access to low cost ETFs and tracker funds from Vanguard, Blackrock, Fidelity etc.

  • Ability to hold your pension account in US dollars, potentially mitigating against currency risk.

  • The option to have your pension funds paid into your local US bank account (or any international bank account that is in your name).

  • Benefit from ongoing professional advice and investment management from a US, SEC regulated financial adviser.

Are There Any Drawbacks In Transferring My UK Pensions to A US SIPP Account?

Whilst a USA SIPP will benefit most US residents who previously lived in the UK, below we list some key considerations that may negatively impact your retirement should you choose to transfer your funds:

  • Costs incurred from transferring to a US SIPP vary, and depending on who you choose to work with, this may be too expensive. Most expat financial advisers charge between 1% and 5% of the total pension value to transfer your funds. At The Wealth Genesis, we charge all our clients the same flat-fee of £3,000, due only upon completion, regardless of the total pension value.

  • You may not need to transfer to a US SIPP if your existing UK pension scheme is prepared to allow you to manage your account, and pay you flexible income as a US resident.

How Is My UK Pension Scheme & Pension Income Taxed In The United States?

There are 2 elements to a UK pension. These are the tax-free lump sum (pension commencement lump sum) and the remaining income element.

The first is tax-free in the UK, and not necessarily tax-free in the United States (this is a grey area in the US tax code and double taxation agreement). We strongly suggest speaking with a local, regulated tax adviser to confirm your position, as this can in instances vary state-by-state.

The second element is simply taxed at your marginal income tax rate in the US, so it's important to plan carefully so you don't jeopardise your tax position and push yourself into a higher tax bracket unnecessarily.

The Self Invested Personal Pension SIPP For US Citizens

The International SIPP is the most appropriate type of retirement account for almost all US residents, and can be a powerful tool in complementing your local IRA or 401k accounts as you reach retirement age.

The Wealth Genesis is classed as a fiduciary, meaning we only advise in the best interests' of our clients. Our flat-fee, zero commission approach ensures total independence when it comes to both pension products and investment management.

To understand how our expert, UK-US dual qualified advisers can assist and secure your retirement in America, schedule an initial discovery meeting using our diary below.

FAQs

  •  A SIPP is essentially the UK equivalent of a US retirement account. Note, the age of access, and the taxation rules vary differently between the two. For example, you can access a US 401K from the age of 59 and a half, whereas a UK SIPP pension can be accessed from the age of 55.

  • There are dozens of international SIPPSs available on the market, however we feel the best offerings are SIPPs from Novia Global and Morningstar. You can see complete product reviews of these SIPPs on our insights page.

  • In certain instances, US citizens can retain a UK specific SIPP as they become US residents. However, typically it is advised to use an International SIPP to ensure no future issues with withdrawals and taxation.

  • Most advisers charge between 1% and 5% of the total pension value. We charge a flat-fee of £3,000 for all pension transfers, regardless of the quantity or the value.

  • In some instances you can, however it is likely not your best option. Once you have been outside the UK for over 5 years, you no longer receive any tax relief on contributions, meaning you are just locking up your funds for no reason.