Whether a UK pension Form 3520 filing is required depends on the type of pension. A UK workplace pension is generally treated as an employees' trust, which is excluded from Form 3520 and Form 3520-A reporting. A Self-Invested Personal Pension (SIPP) is less clear. It may qualify for the exemption in IRS Revenue Procedure 2020-17, but only if every condition is met, and many advisers file protectively or rely on a documented position.
Most UK pensions are legally trusts. Under Internal Revenue Code section 6048, a US person who funds, owns or receives distributions from a foreign trust must normally report it on Form 3520, and the trust itself on Form 3520-A. The penalties for missing these forms are among the harshest in the tax code. This guide explains which UK pensions fall inside the rules, which fall outside, and how to handle the uncertainty. It covers trust reporting only, not how pension income is taxed.
Why a UK pension can be a foreign trust
The US classifies an arrangement as a trust if trustees hold and protect assets for beneficiaries. Most UK registered pension schemes fit that description. Because the trust is administered outside the US, it is a foreign trust. Therefore, the starting point is that section 6048 reporting could apply. The IRS About Form 3520 page lists the events that trigger a filing.
Form 3520 and Form 3520-A
Form 3520 is filed by the US person. It reports transfers to a foreign trust, ownership of one under the grantor trust rules and distributions received. Form 3520-A is the annual information return of a foreign trust with a US owner. It is due by the 15th day of the third month after the trust's year-end, and the US owner must file a substitute if the trustee does not.
UK pension Form 3520 exemptions
Two separate exemptions matter for UK pensions. Which one applies depends on how the pension was funded.
Workplace pensions: the employees' trust exclusion
Section 6048(a)(3)(B)(ii) excludes transfers to trusts described in sections 402(b), 404(a)(4) or 404A, which cover non-qualified employees' trusts. A UK occupational or workplace scheme funded through employment generally falls here. As a result, most Americans with only an employer pension do not file Form 3520 or Form 3520-A for it. However, the exclusion can be lost if your own contributions exceed the employer's, because the excess may be treated as a grantor trust you own.
Personal pensions: Revenue Procedure 2020-17
In March 2020, the IRS issued Revenue Procedure 2020-17, published in Internal Revenue Bulletin 2020-12. It exempts eligible individuals from Forms 3520 and 3520-A for "applicable tax-favored foreign retirement trusts". To qualify, the trust must meet all of the conditions under local law. In summary, it must be tax-favoured in its home country, report annually to the local tax authority or be subject to information reporting, restrict withdrawals to retirement age, disability or death, and limit contributions.
The contribution limit problem for SIPPs
The contribution condition is where SIPPs struggle. Revenue Procedure 2020-17 requires contributions to be limited to a percentage of earned income, or to an annual cap of $50,000 or a lifetime cap of $1,000,000. UK rules allow tax-relieved contributions up to the annual allowance, which is £60,000 for 2026/27 (GOV.UK, pension annual allowance), and permit unrelieved contributions above it. Consequently, commentators disagree on whether a SIPP satisfies the test. Some conclude it does not. Others argue the link to UK earnings is sufficient. The IRS has not ruled specifically on SIPPs.
| UK pension type | Likely US classification | Form 3520 / 3520-A position |
|---|---|---|
| Workplace pension, mainly employer-funded | Employees' trust, section 402(b) | Generally excluded by section 6048(a)(3)(B)(ii) |
| Workplace pension, employee contributions exceed employer's | Part employees' trust, part grantor trust | Possible reporting on the excess; take advice |
| SIPP or personal pension | Foreign grantor trust, in many advisers' view | Exempt only if Rev. Proc. 2020-17 is met; uncertain |
| UK State Pension | Not a trust | No trust reporting |
Penalties if a UK pension Form 3520 filing is missed
The penalties explain why this question matters. Under section 6677, the penalty for failing to report a transfer to or distribution from a foreign trust on Form 3520 is the greater of $10,000 or 35% of the gross reportable amount. For a US owner, the penalty for a missing Form 3520-A is the greater of $10,000 or 5% of the trust assets treated as owned. Penalties can be waived for reasonable cause. Even so, they are assessed automatically in many cases, and removing them takes time.
How cautious filers handle the uncertainty
In practice, we see three defensible approaches to the UK pension Form 3520 question for SIPPs. The right one depends on the facts and your appetite for risk.
Approach 1: rely on the treaty and a documented position
Many advisers treat a SIPP as a pension scheme under Article 3 and Article 18 of the UK-US Income Tax Treaty and take the position that trust reporting is not required. They document the reasoning and disclose the treaty position on Form 8833 where appropriate. Our guide to Article 18 and UK pension contributions explains the treaty election.
Approach 2: rely on Revenue Procedure 2020-17
Where contributions have always been tied to earnings and below the stated caps, some filers rely on the Revenue Procedure. This works best with a clear contribution history.
Approach 3: file protectively
The most conservative filers submit Forms 3520 and 3520-A anyway. That costs more each year, but it starts the statute of limitations and removes penalty risk. Whichever route you choose, the pension must still appear on the FBAR and Form 8938, as our guide to SIPP reporting on the FBAR and Form 8938 explains.
Proposed regulations to watch
In May 2024, the Treasury and the IRS published proposed regulations under section 6048 that would write a tax-favoured foreign retirement trust exemption into the regulations, with their own conditions. Until they are finalised, Revenue Procedure 2020-17 remains the operative guidance. Therefore, check the current status before relying on either source.
An illustrative case
Consider an illustrative American in Edinburgh with a workplace pension and a SIPP she opened to consolidate old pots. The facts are illustrative. Her workplace pension is employer-led, so it falls under the employees' trust exclusion. Her SIPP received a £40,000 transfer and modest annual contributions. Her adviser documents a treaty-based position, lists both pensions on Form 8938 and the FBAR, and keeps a contribution record in case the Revenue Procedure 2020-17 route is needed. That file is defensible. A file with no UK pension Form 3520 analysis at all is not.
If you hold a UK pension and have never considered the UK pension Form 3520 rules, book a consultation with our US-UK pensions team. We review each pension, choose a defensible position and align it with your FBAR and FATCA reporting.
Frequently Asked Questions
Do I need to file Form 3520 for my UK pension?
Usually not for an employer-funded workplace pension, which is generally excluded from Form 3520 reporting as an employees' trust under Internal Revenue Code section 6048(a)(3)(B)(ii). For a SIPP or personal pension the answer is uncertain, and depends on Revenue Procedure 2020-17 or a documented treaty position.
Is a UK SIPP a foreign trust for US tax?
Many US advisers treat a Self-Invested Personal Pension as a foreign grantor trust, because the member funds it and it is held by trustees outside the US. Others treat it as a pension scheme protected by the UK-US Income Tax Treaty. The IRS has issued no ruling specific to SIPPs.
What is Revenue Procedure 2020-17?
Revenue Procedure 2020-17 is IRS guidance from March 2020 that exempts eligible US individuals from filing Forms 3520 and 3520-A for certain tax-favoured foreign retirement and savings trusts. The trust must meet conditions on local tax treatment, reporting, withdrawal restrictions and contribution limits, including a $50,000 annual or $1,000,000 lifetime cap.
What is the penalty for not filing Form 3520?
Under Internal Revenue Code section 6677, the penalty for failing to report a foreign trust transfer or distribution on Form 3520 is the greater of $10,000 or 35% of the gross reportable amount. For Form 3520-A, it is the greater of $10,000 or 5% of the trust assets treated as owned by the US person.
Does a UK workplace pension need Form 3520-A?
Generally no. A UK workplace pension that is mainly employer-funded is treated as an employees' trust, not a grantor trust owned by the member, so Form 3520-A does not apply. Advice is needed if your own contributions have exceeded your employer's.
Do I still report my UK pension on the FBAR if Form 3520 is not required?
Yes. The Form 3520 exemptions do not remove other reporting. A UK pension is generally reportable on the FBAR, FinCEN Form 114, if your foreign accounts exceed $10,000 in total, and on Form 8938 if you exceed the FATCA thresholds.
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