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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 Relationship Between A QROPS, An IFA And A TVA

If the IFA you are dealing with will not provide you with a TVA, then Do Not undertake your QROPS through them. As you have no idea as to the effect of the QROPS charging structure. Also take note that neither do they. Find an IFA who is happy to undertake the TVA for you, as only a fully G60 or equivalent qualified IFA is able to produce a TVA. To be honest only a fully qualified IFA will know what a TVA is. Once undertaken, both you and your IFA will have a clear picture of your proposed QROPS transfer in financial terms.

What the TVA should show you is that at the same growth rate as your UK pension the QROPS will produce a higher fund value. The most important factor in this is the fee structure of the proposed QROPS. If it is too high the fees will eat into the fund value. In the extreme the fund value will be less than if you left your UK pension where it was. On the other hand if the QROPS recommendation is right for you. The TVA will show that the proposed QROPS transfer will produce a significant increase in benefit compared to your UK pension scheme.