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Tax Law (Questions About Taxes)/Foreign pension tax rules


Cross Border Gal wrote at 2013-08-17 00:47:46
This is a difficult question to answer since there are not enough facts. The SIIP Could be viewed from a US perspective as a foreign grantor trust or as a foreign pension. Many variables come into play when making the determination. The SIIP itself is nothing more than a wrapper that gives you greater investment flexibility (pray you aren't a US person who has a SIIP that is a foreign grantor trust that has invested in a PFIC (i.e. a foreign mutual fund)(non-US fund).  Are you a US citizen who is working in the UK? If a participant personally contributes more than 50% of the overall contributions to a SIIP, generally the fund is treated as a foreign grantor trust for US tax purposes and the participant/owner would be required to file Forms 3520 and 3520-A each year with the IRS.

Under the US-UK Treaty, from a US perspective, if the employer contributions to a UK employer plan represent at least 50% of the total contributions then the investment growth within the pension is protected from UK and US tax until withdrawn. The realized income and gains generated within the plan would normally be taxed on the participant's US return as with any other grantor trust arrangement. However, the Technical Explanation to the Protocol seems to indicate that the growth is not currently taxable.  Seek professional advice on this one asap.

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Tax and general business including hospitality related (hotel mgmt degree and experience in industry prior to obtaining ms tax and cpa).


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