SIPPs and Working Around US IRS and 401(k)

UK expats living in the US face a major problem: transferring occupational income pensions. At the moment, there are no provisions to do this! Government differences in pension processes make this an impossible task if drawing lump sums is desired. However, there are other ways to do it with a little more digging.

Pension Drawing in the US

Occupational pensions, in general, are recognized as retirement plans both in the UK and the US. It is how these contributions are actually made that makes the big difference. To avoid massive taxes in the US, these things must be noted:

  • How the pension accumulated in the UK is viewed in the US
  • The investment choices connected with this fund


SIPP or Self-Invested Personal Pensions is a tax-compliant alternative scheme to drawing pensions as a UK pension. In a nutshell, it will provide more flexibility, portability, and compatibility with US pension drawing processes. This is compared to low-cost stakeholder pensions and personal pensions which are not tax-compliant in the US and are sure to hemorrhage the fund.

How it Works

SIPP is a personal contract between an individual and a pension provider. Investment powers are flexible this way because of the following reasons:

  • Unlisted shares
  •  Collective investments as SIPP is a “wrapper”
  • Investment trusts
  • Property and land insurance bonds (this does not usually cover residential land)

SIPP offers much freedom in making your own choices to ensure where your investments go. It is possible to also hire an investment manager to decide when, where and how the pension is invested. SIPP is very effective for people who want a hands-on approach to investing, switching when desired. SIPP also incurs certain charges which may be more beneficial for larger investment sums or for people who have experience in investing.