Mastering U.S. Tax Reporting of Foreign Retirement Account Ownership and Distributions

Case Study on Calculating Current Tax, Identifying Recognition Traps From Phantom Income, Detailing Informational Reporting

Recording of a 110-minute CPE webinar with Q&A


Conducted on Thursday, February 9, 2017
Recorded event now available


This webinar will provide tax advisers with a comprehensive guide to understanding the reporting requirements of U.S. taxpayers owning or receiving payments from foreign/non-U.S. retirement accounts, including pensions, annuities and social security equivalents. The panel will discuss how to calculate current tax on both ownership and distributions, outline potential recognition traps from so-called “phantom income,” and detail the informational reporting requirements. The event will contain illustrations in the form of a case study showing reporting from hypothetical foreign-based pensions and social security-type accounts.

Description

One of the more complicated and often misunderstood tax scenarios for taxpayers and practitioners alike occurs when a U.S. taxpayer owns an interest in a foreign pension plan or non-U.S. social security type of account.

U.S. citizens who live and/or work for significant periods of time in foreign countries, as well as non-citizens who relocate to the U.S., often have an ownership in some type of foreign retirement account. Ownership of these assets creates unforeseen tax and reporting obligations.

A first point to consider in evaluating the taxability of ownership of foreign retirement accounts is that most overseas plans will not be considered “qualified plans” under IRC 401, which means the accounts generally do not qualify for tax-deferral treatment.

Taxpayers required to file a U.S. tax return will have to treat employer contributions to the foreign retirement accounts as taxable compensation, and any increase in the account’s value will be considered as taxable in the year the growth occurs.

Another concern is the reporting obligation that ownership of foreign retirement account assets creates. Taxpayers with foreign retirement account interests often must file informational reports, such as FinCen Form 114, Report of Foreign Bank and Financial Accounts (FBAR), FATCA reporting, and IRS Form 3520.

Listen as our experienced panel provides a comprehensive guide to the tax and reporting requirements of ownership of foreign retirement accounts.

Outline

  1. Classifications of foreign pensions, annuities and social security
  2. Differentiation between most foreign plans and U.S. “qualified plans”
  3. Income calculations—distributions and ownership
  4. Informational reporting
  5. Case study and illustrations (Canada, UK, Australia social security)

Benefits

The panel will discuss these and other critical topics:

  • What are the reporting requirements for taxpayers owning foreign retirement accounts?
  • What are the tax consequences for U.S. citizens when employers make contributions to foreign retirement accounts?
  • What is the tax impact of distributions from foreign retirement accounts for non-U.S. citizens who reside in the U.S.?

Learning Objectives

After completing this course, you will be able to:

  • Identify the current-year tax and reporting impact of ownership of foreign retirement account assets
  • Distinguish tax impact on U.S. citizens who have spent time abroad and for non-U.S. citizens subject to U.S. taxing jurisdiction
  • Discern components of retirement account contributions must be treated as currently taxable as compensation
  • Identify foreign retirement accounts that require informational reporting on FBAR, FATCA and Form 3520 filings

Faculty

Morris N. Robinson, Esq., CPA, LL.M., Managing Director
M. Robinson & Co., Boston

Mr. Robinson is an experienced tax lawyer and CPA with over 30 years of tax-law experience. Mr. Robinson and his team solve complex financial and tax planning problems that lie at the intersection of taxes, law, finance and business. He focuses his practice on International Taxation and Multistate Taxation of businesses and individuals, including tax planning for the sale of businesses. He has handled highly complex tax issues under the IRS Offshore Voluntary Disclosure Program. Mr. Robinson is currently President of the New England Chapter of the American Academy of Attorney-CPAs (AAA-CPA).

Robert E. Ward, Esq., LL.M., Shareholder
Ward Chisholm P.C., Bethesda, Md.; Vancouver, B.C.

Mr. Ward's practice focuses on tax law, busines planning, estate planning, international taxation, international tax planning and foreign trusts. He is a speaker and author on tax and estate planning issues. He teaches law school classes on estate and gift taxation, estate planning, and business planning since 1986.

Patricia Weisgerber, Esq., LL.M.
M. Robinson & Co., Boston

Ms. Weisgerber's practice areas include federal, state and international tax law. Her experience in international tax law includes tax treaty review, international tax compliance under the Offshore Voluntary Disclosure Program, preparation of international tax returns and international tax consultation. She is currently a member of the Boston Bar Association’s International Law Committee and serves as Chairperson for the Philanthropy Committee of the Boston Trusts and Estates Consortium.


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