FOR LIVE PROGRAM ONLY U.K.-Based Retirement Accounts for U.S. Taxpayers: Mastering Reporting, Maximizing Planning Opportunities Utilizing Treaty Provisions to Achieve Optimal Tax Results While Complying With Foreign Reporting Requirements WEDNESDAY , SEPTEMBER 7, 2016, 1:00-2:50 pm Eastern IMPORTANT INFORMATION FOR THE LIVE PROGRAM This program is approved for 2 CPE credit hours . To earn credit you must: • Participate in the program on your own computer connection (no sharing) – if you need to register additional people, please call customer service at 1-800-926-7926 x10 (or 404-881-1141 x10). Strafford accepts American Express, Visa, MasterCard, Discover . Listen on-line via your computer speakers. • • Respond to five prompts during the program plus a single verification code . You will have to write down only the final verification code on the attestation form, which will be emailed to registered attendees. To earn full credit, you must remain connected for the entire program. • WHO TO CONTACT DURING THE LIVE EVENT For Additional Registrations : -Call Strafford Customer Service 1-800-926-7926 x10 (or 404-881-1141 x10) For Assistance During the Live Program : -On the web, use the chat box at the bottom left of the screen If you get disconnected during the program, you can simply log in using your original instructions and PIN.
Tips for Optimal Quality FOR LIVE PROGRAM ONLY Sound Quality When listening via your computer speakers, please note that the quality of your sound will vary depending on the speed and quality of your internet connection. If the sound quality is not satisfactory, please e-mail sound@straffordpub.com immediately so we can address the problem.
U.K.-Based Retirement Accounts for U.S. Taxpayers Sept. 7, 2016 Tim Cook, Partner Wilder Coe, London tim.cook@wildercoe.co.uk C. Edward Kennedy, Jr., CPA, JD, Partner GrossDukeNelson & Co., Atlanta ed.kennedy@grossdukenelson.com
Notice ANY TAX ADVICE IN THIS COMMUNICATION IS NOT INTENDED OR WRITTEN BY THE SPEAKERS’ FIRMS TO BE USED, AND CANNOT BE USED, BY A CLIENT OR ANY OTHER PERSON OR ENTITY FOR THE PURPOSE OF (i) AVOIDING PENALTIES THAT MAY BE IMPOSED ON ANY TAXPAYER OR (ii) PROMOTING, MARKETING OR RECOMMENDING TO ANOTHER PARTY ANY MATTERS ADDRESSED HEREIN. You (and your employees, representatives, or agents) may disclose to any and all persons, without limitation, the tax treatment or tax structure, or both, of any transaction described in the associated materials we provide to you, including, but not limited to, any tax opinions, memoranda, or other tax analyses contained in those materials. The information contained herein is of a general nature and based on authorities that are subject to change. Applicability of the information to specific situations should be determined through consultation with your tax adviser.
UK Based Retirement Accounts for US Taxpayers 5
Notice ANY TAX ADVICE IN THIS COMMUNICATION IS NOT INTENDED OR WRITTEN BY THE SPEAKERS’ FIRMS TO BE USED, AND CANNOT BE USED, BY A CLIENT OR ANY OTHER PERSON OR ENTITY FOR THE PURPOSE OF (i) AVOIDING PENALTIES THAT MAY BE IMPOSED ON ANY TAXPAYER OR (ii) PROMOTING, MARKETING OR RECOMMENDING TO ANOTHER PARTY ANY MATTERS ADDRESSED HEREIN. You (and your employees, representatives, or agents) may disclose to any and all persons, without limitation, the tax treatment or tax structure, or both, of any transaction described in the associated materials we provide to you, including, but not limited to, any tax opinions, memoranda, or other tax analyses contained in those materials. The information contained herein is of a general nature and based on authorities that are subject to change. Applicability of the information to specific situations should be determined through consultation with your tax adviser. 6
Outline • Overview of the different UK registered pension plans • US income tax consequences of those plans • How to disclose these plans 7
Types of Registered Plans - Created by Individual Type of Plan Individual Employer Retirement Held by Contributions Contributions Benefit Trustee Scheme* Personal Pension Yes Yes Yes Yes Plan (PPP) Self Invested Yes Yes Yes Yes Pension Plan (SIPP) Additional Yes No Yes Yes Voluntary Contribution (AVC) Retirement Annuity Yes No Yes Yes (RAR) Stake Holder (Now Yes Yes Yes Yes moved into work place pensions) Work Place Yes Yes Yes Yes Pensions (WPP) * Chapter I of Part XIV of the Income and Corporation Taxes Act 1988 8
Types of Registered Plans - Created by Corporate Type of Plan Individual Employer Retirement Held by Contributions Contribution Benefit Trustee s Scheme* Small Self Administered Scheme Yes Yes Yes Yes (SSAS) Executive Pension Plan (EPP) Yes Yes Yes Yes Stake Holder (Now moved into Yes Yes Yes Yes work place pensions) Work Place Pensions (WPP) Yes Yes Yes Yes Funded Unapproved Retirement No Yes No Yes Benefit Scheme (FURB) - Now known as Employer Financed Retirement Benefit Scheme (EFRBS) Employer Funded Unapproved No Yes No Yes Retirement Benefit Scheme (EFURBS) * Chapter I of Part XIV of the Income and Corporation Taxes Act 1988 9
Individual Plans - Investment Opportunities/Restrictions Type of Plan Investment Funds Direct Stock Commercial Property investments Personal Pension Yes No No Plan (PPP) Self Invested Yes Yes Yes Pension Plan (SIPP) Additional Yes No No Voluntary Contribution (AVC) Retirement Yes No No Annuity (RAR) Stake Holder (Now Yes No No moved into work place pensions) Work Place Yes No No Pensions (WPP) 10
Corporate Plans - Investment Opportunities/Restrictions Type of Plan Investment Direct Stock Commercial Loan Funds investments Property Backs Small Self Administered Scheme (SSAS) Yes Yes Yes Yes Executive Pension Plan (EPP) Yes Yes No No Stake Holder (Now moved into work Yes No No No place pensions) Work Place Pensions (WPP) Yes No No No Funded Unapproved Retirement Yes Yes Yes No Benefit Scheme (FURB) - Now known as Employer Financed Retirement Benefit Scheme (EFRBS) Employer Funded Unapproved Yes Yes Yes No Retirement Benefit Scheme (EFURBS) 11
Brief History of UK Pensions Plans Huge shake up of whole pension system with effect from 5 April 2006 • Change in the amount of contributions allowable for a tax year. • No carry forward or backward of either relief or contributions. • Annual contribution limit £215,000 introduced • Lifetime valuation limit £1.5m introduced • Able to transfer pension pot to another provider prior to taking benefits (Open Market Option) • When taking benefits 25% of pension pot tax free, the balance used to produce an income • No longer necessary to purchase annuity; investments can generate income from which pension is paid within limits • Pension Pot able to be left to heirs subject to tax of 82% 12
Brief History of UK Pensions Plans Another major shake up with effect from 6 April 2016 • Lifetime allowance limit now reduced to £1m • Annual Contributions limited to £40k or £10k if total income exceeds £150k or currently in pension draw down • Carry forward of unused relief for a max three years • Tax due on pension pot on death reduced from 82% to 55% consideration being given to reducing tax on pension pot further. • Able to pay pension or pot to relatives at their marginal tax rates. 13
̶ ̶ ̶ Pensions in Payment • UK Tax free element normally 25%, may be higher for very old policies • Balance of 75% is used to provide an income in one of a number of different ways: Buy an annuity Draw Down:- amount of pension income is governed by a percentage of the pension pot determined by the GAD (Government Actuarial Department). Any pension payment is taxable income Flexible Draw Down:- you can take any amount out of your pension pot at any frequency until extinguished. UK tax treatment: • If the tax free lump sum as above has been taken then the pension payment is taxable in full at your marginal rate • If the tax free lump sum hasn’t been taken, then the first 25% is tax free and the balance of 75% is taxed as income at the taxpayer’s marginal tax rate when withdrawn 14
US Individuals Working and Living in the UK Earnings from Non UK Employer • Contributions to a recognised USA pension scheme as defined in the Exchange of Notes of 24 July 2001 under Article 3.1 (o) are a tax allowable deduction when calculating UK tax liabilities of the individual. Earnings from a UK Employer • Only contributions to a UK recognised pension scheme as listed above will be UK tax allowable either to the individual or the employer depending on whom is making the contributions. • You should note that most employers in the UK now have to “Auto enrol” you into their “Work Place Pension Scheme” within three months of starting employment. • NB. you can elect to opt out of “Auto enrolment” if you wish but you will be automatically re-enrolled every three years and you need to opt out again each time. 15
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