U.S./U.K. Treaty Does Not Override Code Requirements for Tax-Deferred Rollover

Office of Chief Counsel

Internal Revenue Service

Memorandum

Number: AM2008-009

Release Date: 8/29/2008

CC:INTL:B01:QPHuynh

PRENO-136253-08

UILC: 9114.03-42

date

: August 21, 2008

to

: Michael Julianelle

Director, Employee Plans

(Tax Exempt and Governmental Entities)

from

: Associate Chief Counsel (International)

subject

: UK Pension Rollovers

This memorandum addresses the possible application of Article 18 (Pension Schemes)

of the U.S.-U.K. income tax treaty to a rollover distribution from a U.K. pension scheme

to a U.S. retirement plan. This document may not be used or cited as precedent.

ISSUE

Whether an individual who is a resident of the United States may rely on the

parenthetical language in Article 18(1) of the U.S.-U.K. income tax treaty

1 (the “Treaty”)

to make a tax-deferred rollover distribution from a U.K. pension scheme to a U.S.

retirement plan in circumstances where the distribution would not qualify as an “eligible

rollover distribution” within the meaning of section 402(c)(4).

2

CONCLUSION

No. Nothing in Article 18(1) of the Treaty overrides the requirement that the distribution

must qualify as an “eligible rollover distribution” within the meaning of section 402(c)(4).

FACTS

1

Convention Between the Government of the United States of America and the Government of the United

Kingdom of Great Britain and Northern Ireland for the Avoidance of Double Taxation and the Prevention

of Fiscal Evasion with Respect to Taxes on Income and Capital Gains, signed on July 24, 2001, as

amended by a Protocol signed on July 19, 2002.

2 All references to “section” are to sections of the Internal Revenue Code of 1986, as amended.