Exit tax overseas pension
Re: Exit tax overseas pension
Just noting that this thread (https://www.reddit.com/r/JapanFinance/c ... _or_japan/) on reddit (comment from starkimpossibility) seems to conclude that a US 401k (I assume also applies to a Roth or Trad IRA as well) ARE reportable on the OAR. Not sure if UK pension is similar to a US 401k or not.
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nagoyayagona
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Re: Exit tax overseas pension
Thanks. This is a good spot. The difference between a US 401k and a UK Defined Contributions Personal Pension (Stakeholder, SIPP, workplace pension etc.) is that -- according to my understanding -- while a US 401k can be accessed earlier than pension age (albeit with a 10% penalty), a UK DC pension cannot be accessed earlier than pension age (with a very few exceptions, such as being given a short life expectancy due to terminal illness).ctdummy9 wrote: ↑Sun Jul 03, 2022 1:23 pm Just noting that this thread (https://www.reddit.com/r/JapanFinance/c ... _or_japan/) on reddit (comment from starkimpossibility) seems to conclude that a US 401k (I assume also applies to a Roth or Trad IRA as well) ARE reportable on the OAR. Not sure if UK pension is similar to a US 401k or not.
So, there is a material difference. Although a UK DC pension has a "value", this cannot really be listed as a 解約 value on 31 December before pension age, because you can't 解約 it before that time. This may be why I was told that my UK DC pension did not need to be reported as part of overseas assets. I think I will check this point once more next year when I file my return here.
However... once you turn 55 (it will be at least 57 in my case), you can access the entire amount of a UK DC pension, and so presumably from the year that this happens, the full amount is reportable as overseas assets, just as with a US 401k (and will lead to an exit tax charge if that applies).
I wonder if there are ways to structure this, such as selling some of the securities units in the pension for cash before hitting the reporting age, that would be tax efficient...? Or would that trigger capital gains tax liability? I expect that getting proper advice on this would be money well spent when the time comes.