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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.

Basic Information On A QROPS Pension

QROPS pension and retirement is often considered an opportunity for people to do what they have always dreamed of, and, for many Britons, this means moving overseas.  Perhaps you might feel like exploring other countries, especially once you no longer have to worry about a busy work schedule.  Alternatively, you might want a break from the UK’s notoriously bad weather.  Whatever the reason, it is quite common for senior citizens to retire abroad.

For these globe-trotting Britons, one of the considerations is what might happen to their pension arrangements once they move out of home territory.  Formerly, overseas retirees had to pay extra taxes in order to get their funds transferred out of the United Kingdom.  Furthermore, the status of this money with regards to the pension laws in other countries was rather ambiguous, resulting in a great deal of confusion and inconvenience.

The Introduction Of QROPS Pension

Fortunately, in 2006, legislation was introduced that facilitated the establishment of Qualifying Recognized Overseas Pension Schemes, or QROPS.  Basically, these are schemes that fulfill the standards of Her Majesty’s Revenue and Customs, and are accredited as being worthy recipients of transferees from UK-based pension schemes.  In addition, a QROPS pension is not only for people who are registered under the state pension scheme.  If you are a British person with corporate, stakeholder, personal, or other pension scheme, you can still look into the option of transferring your arrangements overseas.

Choosing A QROPS Pension

Even though QROPS were only established a few years ago, there is already a bewilderingly large quantity for you to choose from.  How, then, do you select a QROPS Pension scheme that is best for you?

Firstly, you should check to see if the scheme you are considering is, indeed, recognized by the government.  Find their accreditation information, and then double-check with the HM Revenue and Customs.  If you find that the QROPS is registered, do not forget to double-check the contact information of the scheme managers.  This will ensure that the people whom you are contacting really are the managers of your chosen QROPS, instead of unscrupulous salespeople stealing the credentials of legitimate entities.

You might also try looking for a QROPS Pension advisor who can help you find the right scheme, or read materials that give you details about the advantages and disadvantages of different types of QROPS.

It is also highly recommended that you choose a country within the European Economic Area (EEA), and not only because doing so will cut down on the abovementioned paperwork.  As functionalist international relations theorists know, economic ties also lead to stronger political and diplomatic relationships.  In other words, you are much more likely to have a relatively easy time managing your consular affairs in a European Economic Area country.

It is much easier to change your pension arrangement—by getting a monthly payment increase, for instance—in EEA countries.  For countries outside the EEA, extra paperwork is often required.  We refer specifically to the State Pension Forecast Application form, also known as the BR 19.  You can find copies of this rather complicated bit of bureaucracy online form the government’s QROPS pension service.

For more information, visit the HMRC website here.

Please see the following webpages for further information on Qrops:

Overseas Pension Schemes - Transfers to QROPS