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

Calculating Current Tax, Revenue Procedure 2020-17, Detailing Informational Reporting

Note: CLE credit is not offered on this program

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

Conducted on Tuesday, October 6, 2020

Recorded event now available

or call 1-800-926-7926

This course will provide tax advisers with a comprehensive guide to understanding the reporting requirements of U.S. taxpayers with beneficial interests in foreign/non-U.S. retirement accounts, including pensions, annuities, social security equivalents, and recent relief exempting specific trusts from filing Forms 3520 and 3520-A. The panel will discuss how to identify, classify, and calculate potential U.S. tax exposures and reporting obligations arising from such foreign plans 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 a beneficial interest in a foreign pension plan or non-U.S. social security-type of account.

U.S. taxpayers who live and/or work for significant periods in foreign countries, as well as non-citizens who relocate to the U.S. and become U.S. taxpayers, often participate in foreign-based retirement accounts. Such accounts may create 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 are not "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 must treat employer contributions to the foreign retirement accounts as taxable compensation, and any increase in the account's value may be taxable in the year the growth occurs unless the U.S. Income Tax Treaty with the pension country provides relief.

Another concern is the reporting obligation for ownership of foreign retirement assets. Taxpayers with foreign retirement account interests often must file informational reports, such as FBAR, FATCA reporting, and IRS Form 3520. Gratefully, recently issued guidance exempts certain trusts from the burden of filing Form 3520, Annual Return to Report Transactions with Foreign Trusts.

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

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Outline

  1. Classifications of foreign pensions, annuities, and social security
  2. Income calculations: distributions and ownership
  3. Differentiation between most foreign plans and U.S. "qualified plans"
  4. Informational reporting
  5. Case study and illustrations

Benefits

The panel will discuss these and other critical topics:

  • What are the reporting requirements for U.S. taxpayers participating in foreign retirement accounts?
  • What are the tax consequences for U.S. taxpayers when employers make contributions to foreign retirement accounts?
  • What is the tax impact of distributions from foreign retirement accounts for U.S. taxpayers whether they reside in another county or in the U.S.?
  • Which plans are eligible for exemption from filing Form 3520 under Revenue Procedure 2020-17?

Faculty

Kennedy-C. Edward
C. Edward Kennedy, Jr., CPA, JD
Managing Director
C Edward Kennedy Jr

Mr. Kennedy has more than 36 years of experience dealing with a variety of international tax matters, specializing in...  |  Read More

Klein, James
James P. Klein
Senior Counsel
Pillsbury Winthrop Shaw Pittman

Mr. Klein focuses his practice in the areas of executive compensation and benefits, and tax. He has broad experience...  |  Read More

Trumpler, Phoebe
Phoebe Trumpler, CPA
Shareholder
Kerkering, Barberio & Co.

Ms. Trumpler’s primary practice is in international tax, providing consulting, tax planning, and preparation of...  |  Read More

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