Home Economy QROPS and the USA

QROPS and the USA

QROPS USAA Qualifying Recognised Overseas Pension Scheme (QROPS) is an option available to people who live, or are planning to live abroad, but have managed to accumulate a UK pension. There are a variety of QROPS products on the market across over 30 jurisdictions globally, and they can offer varying degrees of benefits, including tax efficiency , flexibility, and inheritance options that frankly aren’t available in the UK.

Since the introduction of the scheme in 2006, thousands of UK pension holders no longer residing in the country have been taking advantage of the transfer. To qualify, the QROPS must meet certain criteria set out by HMRC, failure to comply with these regulations inevitably leads to the scheme being excluded from qualification.

US Options

There are over 700,000 UK expatriates residing in America in 2014, and surveys suggest that over 55% have UK-based pensions in place. Add to this, the number of US nationals who accumulated savings into a pension while residing in the UK, but have since moved back, and you get a flavour for the sheer numbers that could benefit from QROPS.

IRS Issues

Never the most popular organisation in the world, the Internal Revenue Service (IRS) do, of course, have their own very special take on QROPS. They do not recognize the schemes, and as such any transfer from the UK into an American-based scheme will be subject to federal income tax on contributions, transfer, and growth.

This matter is certainly complex, and each case must be considered and advised on an individual basis, there is no answer which goes across the board unfortunately.

The main consideration is to what extent any income upon retirement will be subject to tax from either the UK or US, and this much be researched thoroughly.

Other issues include making certain that the tax regimes between the US and the country in which the savings are transferred, complement each other.

Malta is one jurisdiction which has a relatively recent Double Taxation Agreement signed off with the US.

Specifically covered within the agreement are pensions and tax. Because this agreement has been signed off, Maltese QROPS are now recognized by the IRS and are not subject to hefty tax impositions. The UK on the other hand, despite having a Double Taxation Agreement in place, does not have one which covers pension transfers.

The IRS takes a particularly dim view of the UK’s apparent generosity in terms of pension contributions, and as such does not wish to be associated with the allowances provided by the country.

The Malta option is one which offers significant tax advantages for those residing in the US, including the protection of any growth within the fund.

With the recent implementation of FATCA, the IRS have seen their popularity in certain circles fall to an all-time low, and the advantages offered by Malta QROPS currently are being snapped up by many disillusioned residents,
as a means to get something back from one of the strictest tax regimes in the world.

Saeed Maleki
Saeed Maleki
As the former co-founder of "Yazd Zamaneh" publication (زمانه یزد), Maleki is one of the most experienced reporter working for Pars Herald. Saeed started Zamaneh in cooperation with two local publications on 2007. Two years later he closed his news corporation due to post-election protests in which he was accused of agitating people to demonstrate against Iranian government. On the same year he joined Pars Herald Group as the Economy writer. He is currently studying in Yazd's Payam Nour University perusing his bachelor degree. City: Yazd Phone Number: +989127906398 Email: Saeed {at} ParsHerald.com Name in Persian: سعید ملکی

Stay Connected

1,502FansLike
505FollowersFollow

Must Read

How Safe Is A Visit To The Caribbean?

Expats, tourists and business people visiting the Caribbean may well worry about their safety after a seemingly endless series of warnings and alerts over...

How Safe Is A Visit To The Caribbean?

Expats, tourists and business people visiting the Caribbean may well worry about their safety after a seemingly endless series of warnings and alerts over...

Periodic Table Is Elementary For Scientists

Scientists are in their element as they celebrate the 150thanniversary of the periodic table. The table has tortured physics and chemistry students trying to learn...

World’s Top Earning Footballers

As World Cup 2014 approaches in Brazil, the soccer world is talking about who will turn out as the best players of the tournament. Many...

Related News

Can Russia Really Shoot Down US Missiles And Warplanes?

The Allies called the Kremlin’s bluff over sabre rattling that warplanes and missiles carrying out the recent strikes on Syria’s chemical weapons facilities would...

Call To Limit Tax-Free Pension Cash

Expats considering switching their UK pensions to an offshore Qualifying Recognised Overseas Pension Schemes (QROPS) may find their tax-free pension lump sums under threat. As...

How Pollution Shortens Your Life

Just think if you are a keen gardener with a flourishing lawn, you are shortening your life every time you crank up a petrol...

Your guide to TransferWise currency exchange

TransferWise is a foreign currency exchange service that makes life a little easier for expats. Changing money between currencies is always a hassle and most...

May Loses Supreme Court Brexit Battle

Prime Minister Theresa May has had her Brexit plans thrown into disarray by judges ruling she does not have the power to bypass Parliament...

LEAVE A REPLY

Please enter your comment!
Please enter your name here