Optimise Your US Pensions
Our dual-qualified advisors specialise in transatlantic retirement planning, helping you to ensure that your US retirement savings are secure, tax compliant, and optimised for cross-border life.
Relocating to the UK from the US as an American expat can redefine your financial landscape. Your tax residency, regulatory obligations, and often the suitability of your investment and pension structures can all change overnight.
Optimising your US retirement accounts when you are not resident in the US can be particularly complex. Many US institutions refuse to service non-US residents and a single misstep can trigger penalties or leave your beneficiaries unable to access your savings.
At Forth Capital, we specialise in helping high-net-worth individuals navigate these challenges, offering tailored financial planning solutions that safeguard wealth across borders. From tax-efficient investment strategies to comprehensive retirement and succession planning, our goal is to make the complex simple - securing your financial future, wherever you are today.
IRA Rollovers: Take Control of Your Savings
Leaving a 401(k) with a former employer can often mean limited investment choices and hidden fees (typically of 1% to 2% annually). Rolling the 401(k) into a self-directed Individual Retirement Account (IRA) can unlock options for you in terms of stocks, ETFs, and real estate - whilst also potentially reducing costs. IRAs also provide greater estate planning flexibility, as they enable you to name multiple beneficiaries or a trust for your funds.
Key Considerations
What it is: In a direct rollover, the funds are transferred directly from your 401(k) to the IRA without you ever touching the money.
Tax Liability: There are no immediate taxes or penalties. The money remains in a tax-deferred account, and you’ll pay taxes only when you start making withdrawals.
Forth Capital can assist you in facilitating a direct rollover of your 401(k) into an IRA to minimise the risk of unwanted tax bills, ensure compliance with US international tax treaties, and essentially make the complex simple for you.
What it is: In an indirect rollover, the 401(k)-plan administrator sends the funds to you, and you have 60 days to deposit the full amount into an IRA or another retirement account.
Tax Liability: The plan administrator is required to withhold 20% of the rollover amount for federal taxes, even if you plan to complete the rollover. To avoid taxes, you must deposit the full amount of the rollover (including the 20% withheld) into the new account within 60 days. This means you’ll have to come up with the withheld 20% out of pocket. The withheld amount will be refunded when you file your tax return, as long as you complete the rollover properly. If you don’t complete the rollover within 60 days, the distribution will be treated as a taxable withdrawal, and if you're under the age of 59½, you’ll also face a 10% early withdrawal penalty.
What it is: If you roll over funds from a traditional 401(k) into a Roth IRA, this is described as a ‘Roth conversion’, since you are moving money from a pre-tax account (401(k)) to a post-tax account (Roth IRA).
Tax Liability: The amount you convert will be treated as taxable income in the year of the rollover. You’ll owe ordinary income tax on the converted amount, but no early withdrawal penalty applies (even if you're under 59½). Future withdrawals from the Roth IRA (if you meet certain conditions) will be tax-free in both the UK and the US.
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Our US and UK dual-qualified financial advisors specialize in transatlantic retirement planning, helping you to ensure that your retirement savings remain secure, tax compliant, and optimised for cross-border life.
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