Pension Schemes...

Hello All,

Just a couple of questions...

1.  I was recently "made redundant" at work because the company went into administration, this won't affect me application for SET-M, will it?

2.  Due to being "made redundant", I have started a new job and I am thinking about joining the pension scheme there because it is quite good.  The question I have about it is, will I have to pay US Tax on the contributions??

Internal Revenue Code section 402(b) says that employer contributions are taxable.

You may elect to use Article 18 of the double tax treaty if this is to your benefit.

There are two options; either pay the IRS tax on yours (if any) and your employer's contributions now; or defer the tax (up to IRS limits) until you take income out of the pension. Which you take will depend on your circumstances and the nature of the pension.

Many times you can use excess UK tax credits to pay the tax on the contributions to the pension and build up a US tax free basis and then use the treaty to protect any gains from US taxation and avoid a lot of forms that would otherwise be required. This is a complicated area so I'd get some professional advice.

I would only add, search through old posts in this forum. There are some good discussions about this issue.