US 401K and the LTA

Anyone come across a client with a 401K.

Did you find and conclusive evidence that such a plan would not count towards nor reduce their UK standard lifetime allowance?



  • CaroCaro Member
    Hi Jona 

    The LTA is the max that you can accrue and draw from a UK registered pension scheme. As a 401K is not UK based and not a registered scheme that benefits from UK tax relief, it should have no impact on an individual's LTA.

    Transferring from a registered scheme to a recognised overseas pension scheme, QROPS, is a crystallisation event and so would impact on the LTA. However, my understanding is that it is not possible to transfer from a UK scheme to a 401K or vice versa; we have looked into this in the past for clients and it cannot be done.  

    We have also found it very difficult to get anything concrete on it or any specific help from any of the tech teams because of the way the federal and state taxation systems operate in the US, means that there is no definitive answer as it will depend where the client is / was based. 

    Hope this is of some help! 

  • JonaJona Member
    Thanks @Caro ;

    I was too coming to the conclusion that as they received no UK tax relief on the payments into the 401K there would be no reference to the LTA.

    The other question of course was if he could transfer it in (and increase his LTA) - but as you point out - doesn't look like it.

    A great help, thanks again.
  • CaroCaro Member
    Pleasure! :smile: 
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