Amongst the most popular destinations, for the many people who migrate from the UK each year are Australia, New Zealand, Canada, Spain and France. Included in the list of the top destinations would also be the USA. As with any other destination, a USA migrant, with accrued UK pension scheme benefits, would look for suitable advice on Qualifying Recognised Overseas Pension schemes (QROPS).
Unlike most of the popular destinations for people leaving the UK, the USA has more complicated issues when it comes to QROPS. For an individual looking at Her Majesty’s Revenue and Customs (HMRC) list of QROPS, they would see over a dozen USA QROPS listed. However, although the USA schemes have been registered as QROPS, this does not mean that they can accept UK pension transfers.
The United States Internal Revenue Service (the IRS) are not as flexible as some jurisdictions when it comes to accepting overseas pension transfers into their schemes. Therefore, although USA individual retirement arrangements (IRA’s) and 401K schemes appear as QROPS on the HMRC list, they would not be able to receive a migrant’s UK pension fund as a transfer in. As a result, a UK pension member that is ultimately looking to retire in the USA, would have to look at other jurisdictions – outside of the USA – for their QROPS.
Migrants should be aware that not all QROPS jurisdictions are tax friendly for USA residents and advice or guidance would need to be taken.