# Are SIPPs subject to double taxation in the USA?



## NewBritInTX (Dec 7, 2019)

Hi Everyone,

I'm moving to the USA in a few months, and would appreciate any advice about what's best to do with my SIPP. As far as I can make out, there's no problem with holding a SIPP while resident in the US (though of course you can't contribute to it). My question is whether it'll be subject to double taxation once I retire and start taking funds from it.

Anyone have any experience on this?

Many thanks, y'all,

​​​​​​​S


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## Bevdeforges (Nov 16, 2007)

I'm going to move you over to the Expat Tax section where you may well get a slightly better response.


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## Bevdeforges (Nov 16, 2007)

While I'm not familiar with SIPPs or any UK based retirement funds, I think you'll find that the US tends to tax these things while you are accumulating funds in the account rather than on withdrawal at retirement time.

Although it sounds much like the US IRA or 401K, the US doesn't recognize similar retirement accounts for tax purposes. Normally, you'll be expected to declare the income each year as it accumulates and pay tax on that. Whereas on retirement and withdrawal of the funds, it is treated like withdrawing savings from a bank account - the taxes are already paid.

There may also be additional reporting requirements (as "foreign investments" or the dreaded PFIC) while you hold a SIPP or any other type of investment account like this. I'm sure someone with more direct experience will be by shortly to advise.


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## Jca1 (Aug 7, 2019)

The SIPP withdrawals/distributions (including the 25% lump sum that's tax-free in the UK, despite some wishful thinking or misreadings of the UK-US treaty) are subject to US tax if you're a US citizen or resident. I've heard you have to use HMRC form 2002 to stop UK tax withholding in the UK, but I haven't been through that process myself. Maybe someone else who gets UK pension distributions in the US will reply. In any case, it shouldn't be taxed by the UK, but you might have an HMRC form to fill out.

The consensus is that SIPP and other UK pensions are PFIC-safe per Treasury regulations. Some tax practitioners advocate filing forms 3520 & 3520-A to report the SIPP as a "foreign grantor trust," which tends to go badly and lead to massive randomly-issued penalties. I'd stay away from that -- a SIPP probably doesn't meet the Treasury definition of a trust if you have full control over investment decisions and can transfer the funds to another provider, and further, I'm not aware of anyone being penalized for not filing the forms 3520 & 3520-A for a UK pension, and neither are the tax preparers and attorneys I've talked to. Personally I'd stick to reporting it on the FBAR and form 8938 (if you're above the threshold for 8938 being required). On the 8938 I'd probably list it as "other" and write in "pension." 

If you have ISAs, those can be more trouble, and I'd advise disposing of them before moving to the US or acquiring US citizenship.


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## NewBritInTX (Dec 7, 2019)

Thanks v much, Jca1, really helpful. Warm regards,


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