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U.S. Tax Reporting of Foreign Retirement Account Ownership and Distributions: New Proposed Regulations

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

Note: CLE credit is not offered on this program

A live 110-minute CPE webinar with interactive Q&A

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Tuesday, July 30, 2024

1:00pm-2:50pm EDT, 10:00am-11:50am PDT

Early Registration Discount Deadline, Friday, July 5, 2024

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 retirement accounts. Our panel of international compensation experts will review the recently released proposed regulations as they apply to pensions, annuities, social security equivalents, and other non-U.S. retirement accounts. The panel will present illustrations 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 occurs when a U.S. taxpayer owns a beneficial interest in a foreign pension plan or non-U.S. social security account. Taxpayers who live and work for significant periods in foreign countries and non-citizens who relocate to the U.S. and become U.S. taxpayers often participate in foreign-based retirement accounts. Most overseas plans are not qualified under IRC Section 401, meaning the accounts generally do not qualify for tax-deferral treatment. Such accounts may create unforeseen tax and reporting obligations.

In May 2024, Treasury released proposed regulations that impact foreign retirement plans. The proposed regulations modify the reporting exemptions initially identified under Rev. Proc. 20-17 in several ways. The proposed regulations expand the definition of retirement trusts which may be treated as "tax-favored foreign retirement trusts." The proposed regulations also address "tax-favored foreign non-retirement savings trusts," and establish a new exemption category for "tax-favored foreign de minimis savings trusts."

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 reports, and IRS Form 3520. Gratefully, specific 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 comprehensive guidance on 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. Proposed regulations
  5. Informational reporting
  6. Case study and illustrations

Benefits

The panel will discuss these and other critical topics:

  • How the new proposed regulations modify Revenue Procedure 20-17
  • 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 contribute to foreign retirement accounts?
  • What is the tax impact of distributions from foreign retirement accounts for U.S. taxpayers, whether they reside in another country or the U.S.?
  • New thresholds and contribution limits under the proposed regulations

Faculty

Kennedy-C. Edward
C. Edward (Ed) Kennedy, Jr., CPA, JD

Managing Director
C Edward Kennedy Jr

Mr. Kennedy has more than 42 years of experience dealing with a variety of international tax matters, specializing...  |  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

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