[confusedamerican]

I am a 23yr old US and UK citizen (US by birth, and UK through family), and was planning on moving to England for ~2 years to help support my grandparents and work.

My question is whether it makes sense to add money towards a UK pension, with the potential of employer matching, if I'm only going to be in the country for a short time. I have ~20K saved up in my U.S. 401k, which I'll be rolling into some form of IRA when I leave the company. However, from doing some searching online, it looks to be near impossible to rollover funds from a UK-based pension plan to a US-based retirement plan. Additionally, I can't make any payments towards my IRAs while abroad, because of the stipulation that you need to be having taxable income to the US. While living over there under $97K a year and with UK's double taxation treaty with the US, I believe I wouldn't be taxed twice for the income made.

I'm not sure if it makes more sense to have that pension for 2 years and then let that money sit there for 50 years until I can take it out, or if I should just open a savings account with a global bank, so I'll have access to the money (and could start contributing to IRA when I return).

Let me know if anyone has any experience with this! Thanks.

 

[Joppa]

Pension is a long-term investment, and being young, you are talking about next 50 years or more. Rules change and no one can say for certain whether paying into a UK pension plan (company pension) is a good idea or not. Many people invest in properties (real estate) as a better way of retirement planning, especially in London where house market has sky-rocketed over the last 20-30 years. I remember a flat in Chelsea selling for £30,000 40 years ago and now changing hands close to a million. If you are only going to be in UK for a few years, I suggest you find a more flexible way of saving.

 

[SharpE]

If I were you.... I'd look into two opportunities.

1. Saving money in a regular US brokerage account, then once back in the U.S. making an income, you can move this money into a Roth IRA account over time.

2. In addition, look into the possibility of converting your rollover IRA (the 401k funds) into a Roth IRA. I'm not sure how much you will be making, and with the foreign tax treaties etc. you may find yourself in a low enough US tax bracket to find it beneficial to convert some of that $20k into a Roth IRA.

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SharpE