Transferring Your 401k and IRA Pension Funds to an Australian Super

The process for retiring in your own country and filing the documents needed to receive pension is quite easy and convenient. However, it might be a bit more complicated if you plan to retire in Australia and have your hard-earned money transferred into a super account.

The Process

Australian expats and U.S. citizens who decide to retire in Australia are given two choices on what to do with their pension funds. One is to withdraw it all before they leave the United States. The other is to withdraw it later when they reached the prescribed age of 59.5 years old.

If you withdraw your pension fund before you reach the mandated age, you’ll have to pay a 10% penalty tax on top of other fees you might incur in the process. Taxation from the ATO is not yet accounted in this because you’ll be getting your funds as a U.S. resident.

The Australian Tax Office (ATO) considers lump sum payments from U.S. pension funds as a mix of the following components:

-          Pre-tax contributions made by the person.

-          Contributions made by the US government.

-          Income earned by the fund itself through dividends, capital gains, and interests.

Funds transferred from the U.S. are typically considered non-concessional contributions. However, portions of the fund might be considered concessional which means it would have to be taxed by the Australian government to some extent.

There’s a cap to how much you non-concessional contribution you can transfer in a year. Currently, the maximum amount you can put into a super from your pension fund is $100,000 plus a bring forward value worth 2 years of your contribution, giving a total lump sum value of $300,000. This means that large pension funds would have to be transferred over a number of years to comply with the limit. Pension funds are remitted directly into your super fund.

Usually, there’s no problem in transferring pension funds from any source into an Australian super. However, you must focus first on resolving the risks involved in taking out your money from the country of origin, like paying early release penalties and taxes. After that, you have to look at the size and the valuation of the fund. The amount taxable in Australia will then have to be assessed after all the previous processes have been completed.

Conditions to Meet

Individuals aged 65 to 74 can only transfer the fund when they pass the ‘work test’. This states that you should have worked at least 40 hours within 30 consecutive days in a year to qualify for the transfer. Those who are under 65, on the other hand, can make the transfer without having to pass the work test. However, individuals aged 75 and above are not allowed to transfer their foreign pension funds into an Australian super.

Unless you’ve submitted the tax file number (TFN) of your Australian super account, you won’t be able to completely make the transfer. You’re given a maximum of 30 days to submit it after you make the transfer. Otherwise, the Australian super will be obliged to return your fund back to where it originated.

Funds received in excess of the contribution limit must be returned to the foreign fund within 30 days after the transfer was made. This is to prevent you from exceeding the cap on the non-concessional contributions you can have on your super fund. Individuals aged 65 years and above are given a cap equivalent to the prescribed limit for non-concessional contributions on the same year. On the other hand, those who are 64 years of age and below are given up to three times the said limit for the year.


Transferring your pension fund from the US into an Australian super will inevitably incur taxes. You have to consider the tax treatment of both countries which can be a rather complicated process given that the U.S. has different pension plans in place. It’s highly recommended for individuals who plan to permanently move to Australia with their pension money to seek advice from a tax expert.

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