# UK SIPP Account for US Citizens: Questions, Please...



## suswang8

Hi, all.

I've had a UK workplace pension scheme for several years. I have since moved back to the US and wanted to transfer this account to a UK SIPP for the sole purpose of having more investment options.

I spoke with Halifax first, who told me that because I am a US citizen, they cannot open an account for me and allow me to do the transfer, due to potential tax implications with the IRS.

I then called Fidelity's SIPP department, and they are claiming that they cannot process a Fidelity to Fidelity transfer because I am a US citizen. I explained that I have been a US citizen all along, and then they seemed to change their answer to say that they cannot do it because I am living in the United States now. Does this make any sense? To be clear, I am no longer making any contributions to any UK pension plan nor am I planning to take any distributions anytime soon.

Thank you.


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## JustLurking

suswang8 said:


> I spoke with Halifax first, who told me that because I am a US citizen, they cannot open an account for me and allow me to do the transfer, due to potential tax implications with the IRS.
> 
> I then called Fidelity's SIPP department, and they are claiming that they cannot process a Fidelity to Fidelity transfer because I am a US citizen. I explained that I have been a US citizen all along, and then they seemed to change their answer to say that they cannot do it because I am living in the United States now. Does this make any sense?


It might not make a lot of sense, but it's probably par for the course post-FATCA.

Many UK banks and other financial institutions no longer want anything to do with US citizens or US residents. FATCA forces non-US banks to become unpaid IRS enforcers, and one way that these banks can easily reduce their enforcement costs is by simply taking the commercial decision to say 'no' to any and all US citizen or US resident customers.

Because it's a commercial decision on the part of the financial institution, you'll see differences in approach between banks, and also banks and other financial institutions simply making up rules on the spot when a situation arises that they haven't seen before. For example, Fidelity cannot easily kick out an existing long-time customer who holds a pension with them, but they can very easily refuse to open a new pension account, or a new type of pension, for any 'US person'.

Maybe try Hargreaves Lansdown and AJ Bell. These are the only two UK SIPP providers I know of off the top of my head that are not entirely antagonistic towards US citizens. You could also of course complain to your congresscritter about FATCA's overbearing extraterritoriality, but aside from that being somewhat cathartic, expect no real effect. Congress has been well aware for a decade now of all the problems that FATCA causes, and has chosen to do nothing whatsoever about any of the issues.


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## Jca1

AJ Bell and MyExpatSIPP will accept US-resident clients. I don't know much about either of them aside from that.

HL will let you keep your account with some caveats (cannot hold mutual funds, can't make deposits) if you opened it while living in the UK, but they won't knowingly take on clients who are resident in the US.

It's not really what you asked, but you also have the 3520/3520-A question if you decide to transfer to a SIPP, so it's probably best to decide how you want to handle that and if you don't self-prepare, discuss with your tax preparer, before doing anything. Personally I think these forms are best avoided unless it's clear that you have a foreign trust, but opinions will vary.


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## suswang8

Thank you. 

-1- For my existing UK workplace pension, I have been putting it on my FBAR and reporting it on Form 8938. Are there a lot of people who think a SIPP triggers *additional* reporting requirements than a standard UK workplace pension (e.g., 3520)? Or, generally speaking, the reporting requirements are deemed to be the same? (I will not be buying any mutual funds with it -- just ETFs and stocks, and perhaps some options, if allowed.)

-2- Also, Fidelity is requiring me to seek tax advice before transferring to a SIPP. Are there downsides/disadvantages (in the US or UK) to transferring to a SIPP from a workplace pension once you have already left that employer?

Thank you.


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## Jca1

suswang8 said:


> Thank you.
> 
> -1- For my existing UK workplace pension, I have been putting it on my FBAR and reporting it on Form 8938. Are there a lot of people who think a SIPP triggers *additional* reporting requirements than a standard UK workplace pension (e.g., 3520)? Or, generally speaking, the reporting requirements are deemed to be the same? (I will not be buying any mutual funds with it -- just ETFs and stocks, and perhaps some options, if allowed.)
> 
> -2- Also, Fidelity is requiring me to seek tax advice before transferring to a SIPP. Are there downsides/disadvantages (in the US or UK) to transferring to a SIPP from a workplace pension once you have already left that employer?
> 
> Thank you.


I'll try to answer your questions.

1) Yes, there a lot of people who think that the SIPP requires forms 3520 and 3520-A. Some reasonable counterarguments are as follows:

a) a SIPP doesn't meet the IRC definition of a trust as it is entirely self-invested with no one performing the duties of a fiduciary. Implication: you probably want to be 
careful about having anyone manage the investment decisions of your SIPP

b) IRS staff at the IRS London office (before it closed in 2014) advised taxpayers that filling out 3520/3520-A for UK retirement accounts was paranoid

c) several IRS initiatives have been aimed at reducing the number of forms 3520/3520-A filed for retirement accounts, although the literal language excluding the SIPP is not there

d) even if the form is required, you are far more likely to be penalized after filing it than if not filing it

The IRS can for the most part do what it wants, so a, b, and c may not really help. Personally I think the best solution would be to avoid the SIPP and instead use a workplace pension with very low fees that allows you to invest in Vanguard ETFs, but I don't know if any workplace pensions like that are available. Nonetheless, many SIPPs get reported on FBARs and 8938s every year with no follow-up requesting 3520/3520-A. I know of at least two firms with hundreds or thousands of customers reporting SIPPs this way for years with no problems.

Some practitioners also recommend filing form 3520 (but not 3520-A) for the workplace pension under the theory that filing all potentially required forms reduces risk, but this doesn't really work because of argument d above.

RE: investment types, this doesn't affect whether any of the above-mentioned forms are required. Non-US ETFs, mutual funds, stock of companies that are themselves PFICs, and options on any of the preceding would be considered PFICs requiring form 8621, except that the retirement accounts covered by a tax treaty (such as the SIPP) are exempt from PFIC reporting.

2) Is Fidelity requiring you to get tax advice or investing advice? The latter is common for pension transfers in the UK. The former would be unusual as there are no UK tax implications, and no US tax implications other than the reporting. The upside and the downside of the SIPP is that you're responsible for investing it: potentially lower fees, more flexibility, potentially more risk.


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