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Aurora US Plan

Aurora US Plan

Aurora US Plan at a Glance

The Aurora US Plan (the plan) is available to US expatriates and/or dual residents, Green Card Holders, and foreign nationals. This allows the member to build a retirement pot in a tax friendly vehicle, without the deduction of US tax whilst in the growth phase, maximising the capacity for eventual retirement.

The plan is classed as a Defined Contribution Retirement Benefit Plan which is written under contract and which has been approved by the States of Guernsey Revenue Service under section 157A(2) of the Income Tax (Guernsey) Law, 1975. The agreement is between the “plan manager” and the “plan member” by means of a pension contract. The contract is designed to incorporate the particular requirements of US connected people and US taxpayers who join the plan.

Due to the fact that the plan meets the UK legislation of a Qualifying Non-UK Pension Plan (QNUPS), this means that the plan remains exempt from UK Inheritance Tax for domiciled individuals.

Additionally, the manner in which drawdown is administered differs such that due to the tax efficiency and flexibility of the plan, it is an ideal independent retirement solution to complement current or existing plans. The assets within the plan are deemed to be generated from post-tax earnings or from personal capital again, post-tax.

Investments

The investment strategy applied to the assets within the member’s cell are as per direction and instruction from the member’s appointed investment manager or advisor. Members of this plan are unable to self direct and therefore members are unable to direct or choose their own investments.

It is normal practice for the plan manager to appoint a Guernsey regulated professional investment manager to undertake the role of selecting and monitoring of the investment portfolio held within the plan.

Normally the returns made from the investments within the plan are free from both US and personal tax liability until the point in time that the plan member enters into drawdown or receives benefits from the plan.

Some more key points to consider.

  • underlying investments within the US Plan are not classed as PFICs by the IRS
  • investment flexibility which may include a full range of asset classes
  • access to professional investment management and holistic retirement planning services

How can I Contribute?

There are no restrictions applied to the contributions permissible to the plan, whether you want to save on a regular basis, make ad hoc payments or by means of a single lump sum or transfer in specie, there is an option available.

What happens when I reach retirement?

You are able to apply for retirement benefits from the age of 55 years as a member of this plan, however this is not mandatory and you can defer this until the age of 75. In the case of ill health, you may be able to access funds earlier. Please contact us if you have any questions relating to ill health.

When you do start drawdown, you have the option to receive up to 30% (or 25% for UK residents) of the value of your pension contract on that date as a pension commencement lump sum (PCLS). Again, your country of tax residency will dictate whether the PCLS is taxable or not.*

Regular income from the pension contract is calculated using the plan value and is set for a period of three years.

You should be aware that there is no guarantee that the funds in your account will be sufficient to pay an annuity until your death. On your death the income of the balance of your pension fund (if any) can pass to your nominated beneficiaries or dependents.

* Note for US persons –  Our understanding is that PCLS is taxable as income in the US.

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