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    Specialist Help for USA Residents

    It is estimate that there are over 1.5 million British expats now living in the USA. A very large proportion of this number will never return to the UK. Choosing to live out their twilight years in sunnier climes.

     

     

    The USA is certainly a favourite destination for many UK ex-pats, however transferring a pension into QROPS is problematic for stateside residents as well as ex-pats.

    For the first time some QROPS is now available that tackles the necessary legal and administrative issues that have prevented US residents and nationals from picking up the tax and investment benefits or transferring to a QROPS.

    QROPS advisers do confirm that the HM Revenue and Customs listings of QROPS have included several US 401(k) pension schemes more or less from day one of April 2006. In principle QROPS transfers were available to US nationals living abroad along with UK ex-pats moving to the United States.

    It does remain that the HMRC’s counterpart in the USA namely the Inland Revenue Service (IRS) has so far refused to recognise QROPS transfers into a QROPS USA 401(k) pension by UK ex-pats living there. The reason for this they claim is that the QROPS structure is not legal.

    A similar no-go status was imposed on US nationals overseas who transferred from a 401(k) to a QROPS.

    QROPS 401(k) And IRA Transfers

    Both triggered IRS tax penalties on any funds that were transferred.

    This unfortunately is likely to tighten up further from January 2013 when the Foreign Account Tax Compliant Act comes into force. The Act will virtually bar all US residents and US nationals living outside the country from transferring their pensions into a QROPS.

    Although this complicates any QROPS transfers in or out of a 401(k) pension some providers have managed to re-structure the master trust that manages a QROPS into a USA-friendly legal entity.

    This is a legal alternative that opens QROPS USA investments as a two-way street between transferring from a UK pension to a US QROPS and likewise from a US 401(k) to an offshore QROPS.

    The framework is now in place, however QROPS USA is still tied up in red tape and successful transfers do require patience, specialist skills and expertise.

    The possibility of moving QROPS pension transfers for UK ex-pats living in the US does open a new world of investment opportunities that were once unavailable.

Qrops Pensions France

The British love-hate relationship with our French neighbours across the channel seems to continue, however France is still the place that many ex-pats emigrate to.

A record 388,000 Britons left the UK permanently to live abroad in the year ending March 2009, many of them choosing to settle in France.

According to statistics in Britain, at least 10,000 ex-pats have resided in France for two years or more.

The lifestyle and warmer climate may have contributed towards this choice but few ex-pats will have considered France as a tax haven for their UK pensions.

In many ways the French tax and pension systems are just as complicated as those in the UK, but anyone living in France permanently who has UK pension rights can transfer into a QROPS offshore pension and gain all the benefits that come with the move.

Transferring into a French QROPS is nearly impossible because no providers are set up to receive UK pensions. An ex-pat’s UK pension can be opened in any of the forty or so countries which are authorised to operate a QROPS scheme.

The Benefits Of A QROPS When Retiring To France

This means the fund can sit and grow in a low tax environment no matter where the scheme member lives and that includes France.

QROPS providers pay pension benefits in any major currency which includes the Euro, this relieves the erosion of pension spending power by exchange rate fluctuation and does away with expensive bank charges for switching cash between the United Kingdom and France.

Pensions are paid gross and income tax is paid where the ex-pat is resident, so obviously this is subject to French tax rules.

Although the QROPS doesn’t have to be French based and be involved in a trust, the funds sit outside of a complicated French inheritance regime.

This is a double bonus for ex-pats as not only do they avoid buying an annuity or alternatively secure pension (ASP) which they would have to invest in if the pension remained UK based, but they also get to pass on any remaining funds to their family when they die.

Advice Regarding When To Take Out A QROPS

Timing is very important when taking out a QROPS. Anyone approaching their seventy fifth birthday who has not yet bought an annuity, should speak to an independent financial firm to see if they can avoid buying an annuity or ASP and make a QROPS transfer instead.

For anyone who has bought an annuity or ASP it’s maybe too late to switch to a QROPS without facing financial penalties. Why don’t you contact us to find out more details?

Anyone else who has not begun drawing their pension should be able to make a tax effective transfer and subsequently receive all the benefits of an offshore pension whilst living in France.

For more information, visit the HMRC website here.

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