The QROPS market has been a useful offshore pension solution for expats around the world for many years now but one territory has always proved to be elusive. Now, expats in the USA looking for a tax efficient destination for their UK pension are taking advantage of QROP schemes.
Even though many US 401k pension schemes have successfully registered with HMRC as QROPS the US INternal Revenue Service has not allowed transfers from UK schemes without a tax charge. This policy become even more strict after the Foreign Account Compliance Tax Act (FACTA) added extra reporting requirements on to foreign financial institutions.
However, there is now a new type of QROPS that has a structure allowed by the IRS and looked on favourably by HMRC.
Some of the benefits of using one of these structures include:
The provision of lump sum benefits to your beneficiaries upon your death
No need to purchase an annuity
The ability to switch between currencies
The possibility to withdraw up to 30% of the fund as an initial lump sum
There are of course myriad benefits in transferring your UK pension to a QROPS and now expats resident in the United States no longer have to miss out.
Expats wanting to explore the process should consult an IFA.