[Stevejallen]

I am a UK citizen resident here in the USA for 7 years. I have a substantial UK pension fund that I would like to cash in and ideally invest in property here in US. The UK allows me to transfer funds without tax liability (since I have been out of UK, and non resident for more than five years) into a Qualified Retirement Occupational Pension Scheme (QROPS) overseas. Unfortunately the US doesn't appear to have any approved QROPS arrangmenets with the UK. Enquiries suggest that if I move my funds to a third party country such as New Zealand that has very relaxed rules regarding pension funds, I can then get access to all of the funds and transfer into the US (bank to bank) as cash. However, I am worried that this will then be hit by income tax as a 'redistribution' of untaxed funds, even though UK allows me to withdraw this tax free... Is there any way to avoid this (e.g. through gifting, or just getting prior agreement from IRS?). I am looking for most tax efficient and perfectly legal way to move these funds out of a frozen pension fund and get the money working.

[AtlantaTaxExpert]

This is NOT the place to get an answer to this type of question, as it deals with complex international tax rules and probably treaty issues between the UK, the U.S. and possibly New Zealand.

You need to hire a competent international tax expert with whom you can meet face-to-face to discuss all aspects of your financial and tax situation and who can do the required research to come up with a viable plan to transfer this money with the least amount of taxes due.

You probably will end up paying this expert a sizable fee for his research time and expertise, but cutting corners on such a fee at the risk of inviting an IRS audit and the resulting massive tax penalties is clearly a Penny-wise for Pound-foolish strategy.

BOTTOM LINE: Hire the tax professional, pay his/her fee and get it done right the first time.