The US could be the land of the free "but try seeing if you can transfer pension funds in to a QROPS without feeling the full force of the US taxman.
The Inland Revenue Service hits hard at anyone attempting to move funds in to a QROPS as the underlying trust structure isn't lawful in the States.
The irony is the HM Income and Customs list of registered QROPS schemes has included some US 401 (k) pensions from right after A-day in April 2006.
The issue is the QROPS isn't the problem, but the process of handling the funds.
Trusts are a crucial feature of QROPS pensions because they eventually own the assets held inside the scheme. This trust set up puts the funds outside the reach of the UK taxman when he comes to collect inheritance tax on the death of the pension member.
In theory, transferring pension funds between UK registered schemes, QROPS and 401 (k) schemes is a two-way street, while in practice, the IRS scowls on the switch.
The result is ex pats can't transfer pension funds into a QROPS USA 401 (k) scheme, and without needing to prejudice UK ex pats moving Stateside, US ex pats moving overseas cannot switch their 401 (k) in to a QROPS either.
Shifting money either way triggers IRS tax penalties on the transfer fund value , similar to the HMRC unapproved payment rules.
Nonetheless, barristers and tax professionals have worked away and come up with restructured QROPS master trust that administrates the offshore pension in a US-friendly legal entity while retaining that significant IHT protection.
The re-designed QROPS are open for business, but the IRS knots the fund transfer in maddening bureaucracy that requires patient teasing for a successful switch.
Once the transfer is affected, a brave new arena of investment opportunity is available within the US QROPS.
The Inland Revenue Service hits hard at anyone attempting to move funds in to a QROPS as the underlying trust structure isn't lawful in the States.
The irony is the HM Income and Customs list of registered QROPS schemes has included some US 401 (k) pensions from right after A-day in April 2006.
The issue is the QROPS isn't the problem, but the process of handling the funds.
Trusts are a crucial feature of QROPS pensions because they eventually own the assets held inside the scheme. This trust set up puts the funds outside the reach of the UK taxman when he comes to collect inheritance tax on the death of the pension member.
In theory, transferring pension funds between UK registered schemes, QROPS and 401 (k) schemes is a two-way street, while in practice, the IRS scowls on the switch.
The result is ex pats can't transfer pension funds into a QROPS USA 401 (k) scheme, and without needing to prejudice UK ex pats moving Stateside, US ex pats moving overseas cannot switch their 401 (k) in to a QROPS either.
Shifting money either way triggers IRS tax penalties on the transfer fund value , similar to the HMRC unapproved payment rules.
Nonetheless, barristers and tax professionals have worked away and come up with restructured QROPS master trust that administrates the offshore pension in a US-friendly legal entity while retaining that significant IHT protection.
The re-designed QROPS are open for business, but the IRS knots the fund transfer in maddening bureaucracy that requires patient teasing for a successful switch.
Once the transfer is affected, a brave new arena of investment opportunity is available within the US QROPS.
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