Search found 3 matches
- Tue Oct 04, 2011 10:02 am
- Forum: Canada / United States Tax & Accounting
- Topic: 3520 / 3520-A / PFIC and UK pensions
- Replies: 3
- Views: 3903
Many Thanks nelsona for the quick reply. Just to clarify, I understand that pension distributions would be taxed in Canada and US if I leave UK, but what about year on year growth the UK pension would have? These gains would be unrealised but would I have to report it and pay tax on it each year onc...
- Tue Oct 04, 2011 6:39 am
- Forum: Canada / United States Tax & Accounting
- Topic: 3520 / 3520-A / PFIC and UK pensions
- Replies: 3
- Views: 3903
3520 / 3520-A / PFIC and UK pensions
Can anyone out there please assist:
Let’s say “Barack†is a US and Canadian dual citizen who is resident in the UK, works for a UK employer and has UK pensions whose contributions and growth are protected (excluded) from US tax as per article 18 of the US / UK income tax treaty.
Barack is interested in moving back to Canada. If Barack moves to Canada he will obviously not be a resident of the UK nor the US. Barack would keep his existing pensions in the UK but of course no longer would make further contributions to them. Despite this, the pensions would (hopefully) gain value between now and when Barack retires.
Would the growth in Barack’s pension plans be taxable in the US if and when he returns to Canada? In other words would the UK pension growth still be protected under the US / UK treaty even though Barack is not a resident?
If not, how would this growth reported year on year on a US tax return? Barack assumes he would need to keep records of the growth and tax paid year on year until he retires and hopefully can claim a credit once he makes distributions. Also, for example, if a $120k pension drops to $70k in year 1 and increases to $130k in year 2, would Barack pay tax on a $60k gain or on just a $10k gain in year 2?
Do forms 3520 and 3520-A need to be filed? Should Barack have been filing these all along? If not, will he need to start to file then once he leaves the UK?
If there are mutual funds in Barack’s UK pensions, would the US start to treat them as PFICs if Barack moved to Canada and they were no longer protected under the treaty?
Barack thanks you
Let’s say “Barack†is a US and Canadian dual citizen who is resident in the UK, works for a UK employer and has UK pensions whose contributions and growth are protected (excluded) from US tax as per article 18 of the US / UK income tax treaty.
Barack is interested in moving back to Canada. If Barack moves to Canada he will obviously not be a resident of the UK nor the US. Barack would keep his existing pensions in the UK but of course no longer would make further contributions to them. Despite this, the pensions would (hopefully) gain value between now and when Barack retires.
Would the growth in Barack’s pension plans be taxable in the US if and when he returns to Canada? In other words would the UK pension growth still be protected under the US / UK treaty even though Barack is not a resident?
If not, how would this growth reported year on year on a US tax return? Barack assumes he would need to keep records of the growth and tax paid year on year until he retires and hopefully can claim a credit once he makes distributions. Also, for example, if a $120k pension drops to $70k in year 1 and increases to $130k in year 2, would Barack pay tax on a $60k gain or on just a $10k gain in year 2?
Do forms 3520 and 3520-A need to be filed? Should Barack have been filing these all along? If not, will he need to start to file then once he leaves the UK?
If there are mutual funds in Barack’s UK pensions, would the US start to treat them as PFICs if Barack moved to Canada and they were no longer protected under the treaty?
Barack thanks you
- Tue Oct 04, 2011 6:16 am
- Forum: Canada / United States Tax & Accounting
- Topic: IRS requirements for reporting foreign pensions
- Replies: 8
- Views: 12543
US Treatment of UK pensions
Dear benryan - I know it has been a few years but did you ever get any clarificationon if you needed to file a 3520 / 3520-A for your UK pensions? I have a similar situation (I have UK employer sponsored defined benefit and defined contribution pensions, plus a SIPP). I have received conflicting vie...