US EXPATS PENSION - CASE STUDIES

Case Study 1

Client age 35 with a planned retirement age of 50 makes an initial contribution of $500,000. If the plan grows at 5% per annum, at the age of 50, the pension would have doubled to over $1 million.

As the pension is made up of 50% capital and 50% growth, he can take up to 30% as a lump sum split equally between the capital and growth. On this $300,000 there are no US Federal tax or Maltese tax payable.

With the remaining $700,000 the International Pension provider calculates his life expectancy to be 85 which generates a maximum pension income of $40,000* per annum.

*A US federal tax liability may arise on any pension income that is deemed to be taken from the pension growth. However this will depend on the structure of the International Pension plan selected and the individual’s own marginal rate of tax.

Case Study 2

Married client with children wanting to retire early and help protect his family should the worst happen.

He has an International Pension plan, again based in Malta, with a value of $3 million.

At age 50 he can take up to 30% of his pension tax-free and then leave the remainder to grow for his family’s future. On his death any residual value within the plan can either be taken by his beneficiaries as one lump sum or continue to be invested and withdrawn as income. In either case, no US Federal tax or Maltese tax will be payable but the value will form part of his estate on death.

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