Pensions that cross the Atlantic without losing their tax shelter.
A pension built in one country and drawn in the other is where the two systems disagree most. The 25% tax-free lump sum, employer contributions, Roth conversions — each is treated differently depending on which side is asking.
Figures relate to tax year 2025 (US) · 2025-26 (UK)
Two rulebooks, one retirement
The treaty's pension article protects growth inside UK schemes from annual US tax — properly claimed. But the UK tax-free lump sum is not automatically tax-free to the IRS, employer contributions can be currently taxable, and SIPP investments can raise PFIC questions of their own.
In the other direction, 401(k) and IRA withdrawals land in HMRC's net once you are UK-resident, and Roth treatment needs a treaty position, not an assumption.
- Treaty claims for pension growth and contributions
- Lump-sum planning before anything is drawn
- US treatment of SIPPs, workplace schemes and transfers
- UK treatment of 401(k), IRA and Roth withdrawals
Timing is most of the tax
The same withdrawal can cost wildly different amounts depending on residence, timing and order of operations. We plan drawdowns before they happen — the year after is too late to fix.
Transfers and consolidation, done carefully
Consolidating scattered pots feels tidy, but across a border it is a minefield: a UK-to-UK transfer is usually fine, a US 401(k) rollover to an IRA is routine — while moving money across the Atlantic in either direction can trigger tax on the whole pot.
We review every proposed transfer against both codes and the treaty before anything moves, and coordinate with your IFA or US adviser so the investment decision and the tax decision are made together.
- Transfer feasibility reviewed under both systems
- Rollovers and consolidations sequenced safely
- Coordination with your existing financial advisers
Primary sources
Official guidance from the IRS, FinCEN and GOV.UK. Thresholds and rates on those pages are updated annually — check the current tax year before relying on a figure.
Questions, Answered.
What clients ask about pensions & retirement
Do I have to report my pension on FBAR or Form 8938?
Frequently yes. Many foreign pensions are reportable even where the income inside them is not currently taxed.
The reporting question and the taxation question are separate, and people often assume treaty protection covers both.
What happens if I transfer my pension?
A transfer that is entirely neutral in the UK can be a taxable event to the IRS depending on the schemes involved.
Overseas transfers in particular are worth checking before initiating rather than after.
Can I keep contributing after I move?
Usually, but the relief may not follow you. Contributions that reduce UK tax do not automatically reduce US tax, and vice versa.
Where the treaty allows relief for contributions to a foreign scheme, it generally has to be claimed.
Is my UK pension taxed by the US as it grows?
Generally not. The treaty does real work here, and growth inside a recognised scheme is usually not taxed by the US as it accrues.
That is not something to take for granted with foreign retirement accounts in general - it is specific to how the treaty handles pensions.
Is the 25% tax-free lump sum tax-free in the US?
Not reliably. That relief is a feature of UK law rather than the treaty, and the US does not simply follow it.
Taking a lump sum while US-resident without modelling it first is one of the more expensive unforced errors in this area.
How are contributions treated?
Employer and personal contributions are looked at differently, and relief on the US side does not automatically mirror the UK treatment.
Getting this wrong quietly builds a mismatch that only surfaces years later.
What about a US 401(k) or IRA if I move to the UK?
The same question runs in reverse: HMRC has its own view of contributions, growth and withdrawals, and it is not identical to the US one.
Timing withdrawals relative to a change of residence can change the outcome substantially.
Next Step.
Tell us what you hold — the scope and a fixed fee follow in writing.