FBAR Retirement: Reporting Plan Accounts & Assets:The FBAR Retirement Reporting of Foreign Accounts within pension plans can be complicated. Generally, the IRS does not require taxpayers to include the foreign accounts within a U.S. pension or retirement account to report foreign accounts. Despite the recent aggressive enforcement of foreign accounts compliance and unreported foreign income – there are limits. And, one of the limitation is the reporting of foreign accounts within a U.S. pension account (most of the time).
FBAR Retirement (Reporting Plan Accounts & Assets)
The FBAR Retirement Reporting rules are complex. We will summarize the reporting foreign accounts within U.S. pension & retirement plans concept for you. The two most common international reporting forms are the FBAR (FinCEN Form 114 aka Foreign Bank and Financial Account reporting form) and FATCA Form 8938 (Foreign Account Tax Compliance Act). What makes the FBAR complicated, is that the form is not a pure IRS form.
Rather, the FBAR was introduced many years ago by FinCEN, and enforced by the IRS in accordance with Title 31 (not Title 26) and AML (Anti-Money Laundering). One important question we receive is about the reporting of Pension & Retirement accounts on the FBAR and FATCA Form 8938.
The IRS likes to keep FBAR rules cloaked in mystery.
It’s sort of like that scene from the Oliver Stone film, JFK – when Joe Pesci proclaims: “
It’s a mystery, wrapped in a riddle, inside an enigma.
The IRS provides the following guidance:
Generally, an account at a financial institution located outside the United States is a foreign financial account.
Whether the account produced taxable income has no effect on whether the account is a “foreign financial account” for FBAR purposes.
But, you don’t need to report foreign financial accounts that are:
- Correspondent/Nostro accounts,
- Owned by a governmental entity,
- Owned by an international financial institution,
- Maintained on a United States military banking facility,
- Held in an individual retirement account (IRA) you own or are beneficiary of,
- Held in a retirement plan of which you’re a participant or beneficiary, or
- Part of a trust of which you’re a beneficiary, if a U.S. person (trust, trustee of the trust or agent of the trust) files an FBAR reporting these accounts.
You don’t need to file an FBAR for the calendar year if:
- All your foreign financial accounts are reported on a consolidated FBAR.
- All your foreign financial accounts are jointly-owned with your spouse and:
- You completed and signed FinCEN Form 114a authorizing your spouse to file on your behalf, and your spouse reports the jointly-owned accounts on a timely-filed, signed FBAR.
Foreign Financial Accounts Held in a Retirement or Pension Plan
Some individuals reckon that the phrase “But, you don’t need to report foreign financial accounts that are… Foreign Financial Accounts Held in a Retirement Plan” means that a filer does not need to include foreign retirement plans on the FBAR, such as the Superannuation or CPF.
This is presumably incorrect. Of course, tax law is almost always up for interpretation. With that said, here is what (we believe) the IRS is saying:
When a person has a retirement account, then the accounts within the retirement plans do not need to be reported separately.
So, if a retirement or pension plan had 30 different accounts within the pension fund, the individual accounts within the pension/retirement fund are not reportable. This is similar to a stock account, in which the total value and account number of the stock account must be reported, not each individual stock within the account.
*In addition, the section does not state that the filer does not need to report “foreign pension plans…” It specifically refers to retirement plans, and the preceding sentence refers to U.S. retirement accounts. Presumably, if the IRS was making the statement that CPFs, Superannuation, etc. were not reportable, they would be more specific.
That is our interpretation of the information from the IRS website.
*Of course, if there are Mutual Funds or other investment funds, it may impact the reporting requirement, and additional 8621 and other forms may be required for mutual funds within the pension plan.
**It is not intended as legal advice for you in preparing your own FBAR.
Golding & Golding: About Our International Tax Law Firm
Golding & Golding specializes exclusively in international tax, and specifically IRS offshore disclosure.
We are the “go-to” firm for other Attorneys, CPAs, Enrolled Agents, Accountants, and Financial Professionals across the globe. Our attorneys have worked with thousands of clients on offshore disclosure matters, including FATCA & FBAR.
Each case is led by a Board-Certified Tax Law Specialist with 20 years of experience, and the entire matter (tax and legal) is handled by our team, in-house.
*Please beware of copycat tax and law firms misleading the public about their credentials and experience.
Less than 1% of Tax Attorneys Nationwide Are Certified Specialists
Sean M. Golding is one of less than 350 Attorneys (out of more than 200,000 practicing California Attorneys) to earn the Certified Tax Law Specialist credential. The credential is awarded to less than 1% of Attorneys.
Recent Golding & Golding Case Highlights
- We represented a client in an 8-figure disclosure that spanned 7 countries.
- We represented a high-net-worth client to facilitate a complex expatriation with offshore disclosure.
- We represented an overseas family with bringing multiple businesses & personal investments into U.S. tax and offshore compliance.
- We took over a case from a small firm that unsuccessfully submitted multiple clients to IRS Offshore Disclosure.
- We successfully completed several recent disclosures for clients with assets ranging from $50,000 – $7,000,000+.
How to Hire Experienced Offshore Counsel?
Generally, experienced attorneys in this field will have the following credentials/experience:
- Board Certified Tax Law Specialist credential
- Master’s of Tax Law (LL.M.)
- Dually Licensed as an EA (Enrolled Agent) or CPA
- 20-years experience as a practicing attorney
- Extensive litigation, high-stakes audit and trial experience
Interested in Learning More about Golding & Golding?
No matter where in the world you reside, our international tax team can get you IRS offshore compliant.
Golding & Golding specializes in FBAR and FATCA. Contact our firm today for assistance with getting compliant.