QROPS for US residents can be extremely complex and whilst the UK regards the USA as a suitable jurisdiction for receiving an exported British pension, the Internal Revenue Service (IRS) in the USA imposes a restriction on such imports from the UK. Even though Britain’s HMRC has approved QROPS in the United States, the IRS will not permit them to accept transfers of British pension funds.
However, a Malta QROPS means it is now possible for British expats living in the USA to legitimately transfer UK pensions into a QROPS. The US accepts Malta QROPS and other pensions as compliant due to the wording of the USA and Malta double taxation treaty.
Although for US residents/taxpayers, there are potentially US tax implications associated with undertaking a transfer from a UK pension to a non-UK based pension which should be fully considered with your tax advisor.
Putting your pension into a QROPS will give you a greater level of control over the way your pension fund is invested and you can consolidate a number of different pensions into one QROPS pot.
QROPS will also let you bestow the rest of the fund to your beneficiaries without any deduction of UK tax upon death (this is after age 75 in the UK), as long as you have spent five years or more living outside the UK.
However, due to recent pension changes in the UK, as of 8th March 2017, there is now a 25% tax charge for any UK pension transfers to a QROPS for US residents. In addition to this there are potentially US tax implications associated with undertaking a transfer from a UK pension to a non-UK based pension.
It is therefore LDN Wealth’s opinion that a QROPS transfer may not be the correct option for some US residents, however each individual case should be considered on a case by case basis as benefits may out way any tax consequences.