Several clients have asked us in recent weeks whether\nforeign pension accounts are reported on the FinCen114 (FBAR).<\/p>\n\n\n\n
Most employer foreign pension plans fall under one of two\ntypes: defined benefit plan or defined contribution plan.<\/p>\n\n\n\n
A defined benefit plan is generally an employer or\ngovernment plan funded by the employer or government, which provides for a\nfixed benefit in case of retirement or death. In most cases, plan participants\nare not considered the legal owners, nor can they direct the investments or\ncause a disposition of funds. Moreover, you may not be able to ascertain the\ncurrent value or balance of a defined benefit plan prior to retirement, or the\nforeign bank and financial accounts.<\/p>\n\n\n\n
Are foreign pension plans reported on FBAR?<\/p>\n\n\n\n
Some practitioners take the position that these plans do not\nneed to be reported on the FBAR. We\ndisagree. <\/p>\n\n\n\n
A conservative approach would be to report it on the FBAR\nusing a reasonable estimate \u2013 if the plan provides for a residual cash benefit\npayable to the beneficiaries upon the plan participant\u2019s death before\nretirement age, this amount may be used as the balance to be reported on the\nFBAR. If you are currently receiving benefits under such a plan, you can report\nthe total annual payments as the FBAR balance.<\/p>\n\n\n\n
A defined contribution plan is funded by the employer and\noften the employee as well; the employee can often direct the investments\nwithin the plan. Additionally, defined contribution plans almost always have a\nreadily-ascertained value or balance. Thus, defined contribution plans MUST be\nreported on your FBAR.<\/p>\n\n\n\n
Several countries\u2014such as Switzerland\u2014have a tiered\nretirement scheme, with three pillars. The first pillar is often a social\nsecurity-type program \u2013 a welfare program providing defined benefits for old\nage and disability. This type of plan is not FBAR-reportable. The second pillar\nis often an employer pension plan, funded by the employer and employee, which\nis FBAR-reportable. The third pillar is generally an individual or private\nretirement plan, which is also FBAR-reportable with bank and financial\naccounts.<\/p>\n\n\n\n
While a social security style of retirement plan provided by\na foreign government does not need to be reported on the FBAR, some foreign\nretirement plans are a hybrid of social security and foreign pension plan,\nalong with bank and financial accounts. These are generally compulsory,\ngovernment-managed funds with contributions from both the employer and\nemployee. <\/p>\n\n\n\n
Some common examples are the Provident Funds of India,\nSingapore, and Hong Kong. While Provident Funds are not utilized in the United\nStates, the many Asian countries have some form of Provident Fund which is\ngeared toward retirement. Despite the\nsimilarities with social security-type programs, these types of foreign pension\nplans must be reported on FBAR. There are many different types of provident\nfunds, depending on which country you work in. Some of the more common types of\nfunds include:<\/p>\n\n\n\n
PPF – Public\nProvident Fund (India)<\/p>\n\n\n\n
CPF \u2013 Central Provident Fund (Singapore)<\/p>\n\n\n\n
CPF \u2013 Central Provident Fund (South Africa)<\/p>\n\n\n\n
EPF \u2013 Employees Provident Fund (Malaysia)<\/p>\n\n\n\n
EPF \u2013 Employees Provident Fund (Nepal)<\/p>\n\n\n\n
TPF \u2013 Thailand Provident Fund (Thailand)<\/p>\n\n\n\n
MPF \u2013 Mandatory Provident Fund (Hong Kong)<\/p>\n\n\n\n
Beyond FBAR reporting, the taxation of accrued undistributed\nearnings are another major concern (and subject to exceptions and exemptions).\nExperienced legal counsel is advised to tackle this complex issue.<\/p>\n","protected":false},"excerpt":{"rendered":"
Several clients have asked us in recent weeks whether foreign pension accounts are reported on the FinCen114 (FBAR). Most employer foreign pension plans fall under one of two types: defined benefit plan or defined contribution plan. A defined benefit plan is generally an employer or government plan funded by the employer or government, which provides […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_daextam_enable_autolinks":"1","_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[1],"tags":[],"class_list":["post-4284","post","type-post","status-publish","format-standard","hentry","category-planning-for-tax-minimization"],"_links":{"self":[{"href":"https:\/\/patellawoffices.com\/blog\/wp-json\/wp\/v2\/posts\/4284","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/patellawoffices.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/patellawoffices.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/patellawoffices.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/patellawoffices.com\/blog\/wp-json\/wp\/v2\/comments?post=4284"}],"version-history":[{"count":1,"href":"https:\/\/patellawoffices.com\/blog\/wp-json\/wp\/v2\/posts\/4284\/revisions"}],"predecessor-version":[{"id":4285,"href":"https:\/\/patellawoffices.com\/blog\/wp-json\/wp\/v2\/posts\/4284\/revisions\/4285"}],"wp:attachment":[{"href":"https:\/\/patellawoffices.com\/blog\/wp-json\/wp\/v2\/media?parent=4284"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/patellawoffices.com\/blog\/wp-json\/wp\/v2\/categories?post=4284"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/patellawoffices.com\/blog\/wp-json\/wp\/v2\/tags?post=4284"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}