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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.

The Benefits Of A QROPS

Moving abroad later in life can be both a dream and a scary prospect. Besides anxieties about leaving one’s usual haunts for an unfamiliar location, retirees frequently worry about what will happen to their pensions once they leave their native soil. The only choice many expat pensioners had was to pay a hefty tax in order to transfer their pensions to wherever it was they had moved to. Anxiety about one’s pension often constrained retirees in their choice of country of residence.

What Is A QROPS?

In 2006, a legislative response to this problem allowed the setting-up of Qualifying Recognized Overseas Pension Schemes for British pensioners. Retirees could transfer their existing UK-based pensions to these government-accredited schemes without incurring the heavy tax. One of the benefits of a QROPS, therefore, can be said to give retirees more freedom of movement.

Greener Pastures (Or Better Rules) Abroad

Though the UK does have many respectable, reliable pension schemes, it must be admitted that they do have their pitfalls. Rules concerning the adjustment of the schemes can be quite strict. Furthermore, you usually have to pay a high tax if you would prefer to get your pension in a lump sum. It is an ironic fact, then, that many Britons can get more favorable pension schemes in other countries, where they will have to deal with less bureaucracy and will lose less money to tax payments. When combined with the cheaper costs of living one often finds abroad, getting a QROPS can actually be a bargain, as compared to staying within the UK on a British public or private pension scheme.

It can also be said that a QROPS can benefit others besides the pension scheme holder alone. Under the QROPS, you might have an easier time transferring any leftover pension monies to your heir(s) than you might if you remained in the United Kingdom, with a UK-based pension scheme.

Getting Some Help

You need not navigate the unfamiliar territory of QROPS alone. You can get QROPS advice from both government staff and private consultants. In fact, it is probably a better idea to discuss bureaucratic and legal considerations with your pensioner before you make any definitive moves to go to another country, or even while you are still deciding on which country to move to. For all you know, the pensioner might have extensive experience with retirees who move abroad. He/she might be able to give you valuable advice on the advantages and disadvantages depending on your unique situation. If you are very fortunate, the pensioner might already have special programs or contact networks in certain overseas locations that might make your finances easier to handle wth reduced fees and costs.

Icing On The Cake

Many of the best QROPS have the benefits Britons have come to expect from some of the better UK-based schemes, and more. Here are some features you should keep an eye out for when selecting a QROPS. First, if you are married, look for a scheme that has special rates for spouses who register as a couple. Furthermore, search for schemes that allow you the freedom to choose who will manage your investments. If you do not want your new pensioner to handle these affairs, you should be able to choose to have your banker do it, or to even manage the investments yourself.

For more information, visit the HMRC website here.