While tax issues around pensions and investments can be complex, with specialist retirement planning you should be able to meet both your short and long-term goals.
You could enjoy certain tax benefits by making contributions to a US pension if you’re a British expat living and working here. This is the case even if you don’t plan to live in the USA after you retire.
Wherever in the world you’re planning to retire to, you should start to think about your tax liabilities now. How much you pay will depend on whether you’re a US tax resident or a non-resident alien (ie. you haven’t passed the green card or the substantial presence test), and whether the country you choose to settle in on retirement has a tax treaty with the USA.
If you’re a non-resident alien you could be liable for a ‘US withholding tax’ of 30% - and you can be taxed in the country you’ve settled in unless there’s a tax treaty in place.
So what are your options?
You could leave your UK pension plan in place and take advantage of the more flexible investment options provided by US IRA or 401k accounts.
We’re able to advise on a number of potentially beneficial retirement plans. Whichever you choose, it’s not advisable to draw funds from an account before you reach the age of 59½ as you’ll attract income tax and a 10% excise ‘penalty’ tax.
IRAs – up to the age of 50, an expat can make a maximum contribution of $6,000 each year, or up to $7,000 after the age of 50
401ks – if you’re working for a US parent company, these could benefit you as there’s an employee limit of $19,000. If you’re over 50, you can add a further $6,000 each year
403b – this could be suitable for people working in certain jobs
Defined benefit plans – different plans with different structures and contribution limits are available depending on your employer and your financial situation.
Contact Atlantica Wealth LLC today
We’re specialist pension advisors based in the USA. We’re UK and US-qualified, fully regulated by the SEC and experienced in advising British expats living in the USA, whether they’re foreign nationals or with dual citizenship.
Retirement planning is one of the most important areas of wealth management for expats living and working in the USA. But it’s also complex and challenging, so choosing the right strategy takes time, knowledge and expertise.
We can help make you aware of your responsibilities and options so that your retirement and pension plans are optimised and comply with the rules of the Internal Revenue Service (IRS).
Free expat pension options guide
We offer specialist retirement and pension planning for British citizens living in the USA. The right pension solution could help you increase your returns and reduce your tax liabilities.
We have a guide to UK pensions that you can download for free, or you can speak to one of our pension specialists. We’ll look at your situation in detail and give you a full written report with our recommendations.