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Topic: Pensions  (Read 590 times)

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Pensions
« on: March 30, 2018, 04:25:20 PM »
Hello folks!

I'm not sure if this is the best board on the forum to ask this question, but here goes:

For US Citizens who have moved to the UK and are employed locally... Did you choose to enroll in the Pensions scheme? My employer here offers a 5% match and I'm tempted to enroll because it would otherwise mean leaving that money on the table. However, I'm unclear on the implications/means of accessing that money, should we return to the states... Any advice from others who have joined a UK pension scheme / ISA vs. those who have opted to retain 401(k)s / IRAs etc. would be appreciated. I don't want to put a bunch of money into a pension scheme that I'll never be able to touch if we leave the UK - is that a possibility? Also, since this is the tax forum... Since the UK Pension seems to be the equivalent of a Roth IRA, but are there any tax implications?

Thanks in advance!
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Re: Pensions
« Reply #1 on: March 30, 2018, 04:59:11 PM »
Great questions and I'm keen to hear some of the responses since my son will be coming to that decision point soon on the employer pension. He is a dual US/UK citizen who arrived back in the UK last year. He has been working "on probation" at a company here and in a couple of months will hopefully be taken on as a full employee and get access to benefits such as a contributory pension scheme with employer match. My thoughts are that he should contribute up to the employer match, but I don't know of any IRS tax complications that may create. I realize he will have to add the account to his FBAR filing each year.

I don't believe a UK employee contributory pension scheme is like a Roth. The money is not all tax free, just tax deferred like a 401k.

An ISA is totally UK tax free but it is not like a Roth in that the money can be withdrawn penalty free at any time. Since it is a tax free savings account then any gains are taxable by the IRS each year.

I also believe that if one should return to the USA then the money in the UK pension scheme is not lost. I myself started receiving distributions from my final salary pension schemes many years after I had left the UK and was living in the USA.
Dual USC/UKC living in the UK since May 2016


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