- 1 Swiss Pension Form 3520 Foreign Trust Reporting
- 2 Is Swiss Pension a Foreign Trust?
- 3 Form 3520/3520-A & Swiss Pension Reporting
- 4 Swiss Pillar 1: 3520-A
- 5 Swiss Pillar 2: 3520-A
- 6 Swiss Pillar 3: 3520-A
- 7 Unreported Swiss Foreign Pension
- 8 Golding & Golding: About Our International Tax Law Firm
- 9 Less than 1% of Tax Attorneys Nationwide Are Certified Specialists
Swiss Pension Form 3520 Foreign Trust Reporting
Swiss Pension Foreign Trust Reporting 3520/3520A: One of the most complicated aspects of IRS tax law for overseas pensions is reporting of the foreign pension for U.S. tax purposes
Owners and beneficiaries of foreign pensions may technically have a requirement to report the trust on Form 3520 and Form 3520-A, although there are some exceptions which may negate the filing requirement.
And with Foreign Accounts Compliance enforcement at an all-time high, coupled with the Form 3520-A penalties – Taxpayers are understandably concerned.
We will summarize the Swiss Pension Foreign Trust Reporting Rules.
*We have several other articles detailing Swiss Pension and U.S. Tax available to assist you.
Is Swiss Pension a Foreign Trust?
Yes, a Swiss Pension is a Foreign Trust. Whether or not it is “reportable” is up for debate.
A trust is an arrangement where a person creates a trust (Trustor), which is generally administered by a 3rd Party (Administrator) and on behalf of a Beneficiary (Employee).
With a Swiss Pension the Trustor is either the:
- Government Trustor (Pillar 1),
- Employer Trustor (Pillar 2)
- Investor/Employee (Pillar 3)
And, each trust has an Administrator, along with the employee beneficiary.
Thus, technically, the Swiss Pension is a Trust.
Form 3520/3520-A & Swiss Pension Reporting
Do you report the Swiss Pension on Forms 3520?
It depends on how you evaluate the rules.
Swiss Pillar 1: 3520-A
Pillar 1 is State mandated (Swiss Government) which most resembles U.S. social security. It has no identifiable segregated balance, and the beneficiary (employee) is not the owner of the trust.
Presumably, the trust would not be reportable on Forms 3520/3520-A.
Swiss Pillar 2: 3520-A
As to Pillar 2, it is also mandated through the Swiss Government, but functions through the employer for employees who earn sufficient income.
Generally, unless the employee has contributed more to the pension plan than the employer has, it is not reported on Forms 3520, since the beneficiary is not the owner of the trust during the years the beneficiary is employed and funding the pension.
In addition, it may qualify for a Revenue Procedure exception under Rev. Proc. 2020-17, depending on the person’s salary, age (determines percentage contributions), voluntary vs. mandatory, and employed vs. self-employed.
*The U.S. to CHF exchange rate is typically 1:1 (or very close), which may impact Rev. Proc. 2020-17 reporting requirements.
Swiss Pillar 3: 3520-A
Swiss Pillar 3 is completely optional and it is funded by the employee only.
Therefore, chances are this is a foreign trust which would be subject to Form 3520-A Reporting.
But, in accordance with Rev. Proc. 2020-17, it may qualify for an exemption if it meets the requirements set forth in the revenue procedure.
In addition, some clients will take the position that it is still a form of pension vs. pure investment, and therefore while it is in the growth phase, and deductions are not being taken, it is can escape reporting.
The main issue is that may defeat this position is that if it is a 3(b) vs. 3(a), the lack of restrictions and overall access to the investment may make it harder to show it is an “employment trust.”
Unreported Swiss Foreign Pension
If you have not properly reported your Swiss Foreign Pension in the U.S. for tax, FBAR, FATCA, PFIC (8621) or other reporting, you may be out of compliance and possibly subject to fines and penalties.
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.)
- 20-years experience as a practicing attorney
- Extensive litigation, high-stakes audit and trial experience
- Dually Licensed as an EA (Enrolled Agent) or CPA
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.