How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask bigduckontax Your Own Question
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 4778
Type Your Tax Question Here...
bigduckontax is online now

My wife is a US citizen, with a UK residence card, and

This answer was rated:

Hi, my wife is a US citizen, with a UK residence card, and we live in London since 2012 (I am an EEA national). We are not planning to go to the US ever again. Currently, my wife still has a IRA in the US (over about 5000 USD) and we started another IRA
here in the UK. Is it permissible to do that, or would we need to close the US IRA at some point? The other question would be, does it make any sense to keep the US one? I guess only if we do decide some day to go back to the US...
Hello, I am Keith, one of the experts on Just Answer, and pleased to be able to assist you with your question. We do not have IRAs in the UK, they are Private Pension Policies, but the principle is the same. Having multiple pension funds is perfectly permissible provided you stay within the range which at present is a pot of 1 million UK pounds. You are way below this figure. Within the UK there is a facility to move funds from one pension scheme to another. However, liberating overseas pension pots is quite another matter and often fraught with high exit charges unless the fund provides for an overseas transfer, which is not a normal feature. It may be adviseable to leave it invested in the States and utilise it at some future indeterminate date. So it is a good idea to retain your US fund for some future use, or transfer it if charges are not extortionate. I do hope my reply has been of use to you.
Customer: replied 2 years ago.
Ok, many thanks. Pardon my ignorance here, but how do these pension funds work exactly!? So, is it, whenever one reaches retiring age, you can freely access the money, without being charged fees? Or even earlier!? How does it work, normally?
The ball game changed from the current tax year.
You can, providing you are over 55 years of age, access your pension pot.
The traditional solution is to take 25% of the pot as a lump sum [tax free] and buy an annuity to pay you a pension for life. However, interest rates are so low at the moment that the return will not be that high.
Alternatively, you can withdraw your pension pot. 25% of this is tax free, the balance taxed at your marginal rate of Income Tax. With juggling over a number of tax years you can keep your taxation within the basic rate of 20%. Again there may be charges for such withdrawals which might make the exercise uneconomic.
That is the current position. When considering a private pension, shop around. As a diabetic I obtained a 13% uplift for an impaired life with one of my pensions. Currently the relevant insurance company is out of pocket!
However, that is only a general synopsis. Although I can do this, you can read it in any financial publication that is all I can do as I am not licenced to give advise on pensions.
Please be so kind as to rate me before you leave the Just Answer site.
bigduckontax and other Tax Specialists are ready to help you
Thank you for your support.