QROPS in the USA guidance

To understand what a QROPS in the USA is you first need to know what a QROPS is.

QROPS are the name of pensions that originated from the UK (or some other parts of Europe) and are transferred to a trustee whose location is outside the UK, and who follows the tax and access guidelines of the originating state. Therefore, if a British pension plan, then the QROPS trustee must follow the guidelines laid down by HMRC and the UK government.



Maltese QROPS trustees – is this a QROPS in the USA?

This location is the most widely “recommended” trustee location outside of the US as it has a Double Tax Treaty of its own with the US. Ironically Malta is often said to be for QROPS in the USA! Some advisers recommend that this trustee location is used where there is a Lifetime Allowance issues and where sufficient pension credits have been built up in the USA.

Types of British pensions that can be considered

Pensions are probably the most complex part of the financial planning process; there are numerous types which are covered by many different sets of rules. Whether you want to discuss a Final Salary scheme, guaranteed benefits, a Stakeholder Pension, a SIPP or your current Pension Scheme, Aisa are experienced and qualified and happy to discuss this with you.

Aisa will advise you on whether a QROPS in the USA or a SIPP are suitable to be considered, and will also review and analyze whether you should do nothing and keep your existing pensions.

What risks are there to a QROPS in the USA transfer?

There are many with QROPS in the USA, and this is a key issue.

There is a Double Tax Treaty with the UK from the USA that clearly lists how British pensions should be treated in the US. Any doubt about access to the tax free sum (PCLS), taxation on income or, indeed, taxation on the fund are covered in rules published by the IRS. Between the DTT and the IRS publication, the US covers “all things UK”. Once analyzed then often, a QROPS in the USA is ruled out, and a SIPP is considered as a result.

With QROPS in the USA, there is immediately an issue as to whether a transfer from a UK pensions to an overseas QROPS would qualify as an “eligible rollover distribution (Section 402c). In addition, even if it does, there is a question mark as to whether the funds should be declared under trust rules as it is no longer a qualifying pension, or is it?

If you are thinking about taking a QROPS in the USA then you MUST consider your options with advice from a regulated adviser from the UK, and a tax advisor in the US. It may benefit you with a lot more income and a lot less tax!

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