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U.S. Tax Reporting of Foreign Retirement Accounts and Other Foreign Trusts

Note: CLE credit is not offered on this program

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

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Conducted on Thursday, January 23, 2020

Recorded event now available

or call 1-800-926-7926

This course will cover tax considerations for individuals with interests in foreign retirement accounts and trusts and will benefit accountants, attorneys, and investment professionals serving these clients. The webinar will go beyond the basics to offer useful practice pointers on how the IRS approaches foreign pensions in an examination situation to prevent potentially costly tax penalties and sanctions. It will cover Americans’ interests in United Kingdom retirement plans, as they are most commonly encountered in practice.


Many Americans work and accumulate retirement accounts abroad. Many foreign nationals immigrate to the United States leaving retirement accounts behind in their country of origin. All of these individuals need to comply with the U.S. Internal Revenue Code and Bank Secrecy Act concerning their foreign retirement accounts and their other foreign trusts. The Internal Revenue Service is actively assessing substantial penalties for noncompliance.

The lack of clear guidance in the IRS' treatment of foreign pensions held by U.S. taxpayers has presented tax advisers with significant challenges in meeting compliance duties. Even the Government Accounting Office (GAO) issued a report in Jan. 2018, requesting the Service to provide more clarity on how taxpayers need to report interests in these accounts.

Most foreign retirement account plans are not considered "qualified plans" under IRC 401(a), which means the accounts generally do not qualify for tax-deferral treatment but are instead governed by Section 402(b) as a foreign trust. Depending on how the IRS applies 402(b) to a particular situation, employees holding foreign retirement accounts (and their beneficiaries) may receive harsher tax treatment than that of other non-tax-favored deferred compensation arrangements. This is particularly true in cases where the Service treats a foreign retirement account as a grantor trust.

Listen as our panel of experts discuss income taxation of a U.S. Persons’ Interests in foreign retirement accounts including identifying individuals and accounts subject to taxation.



  1. Income taxation of U.S. persons’ interests in foreign retirement accounts
    1. U.S. persons subject to U.S. income taxation on their worldwide income
    2. Who is a “U.S. person”
    3. Contributions to foreign retirement account
    4. Earnings on foreign retirement account
    5. Grantor trust rules as applied to foreign retirement accounts
    6. IRC §83 as applied to foreign retirement accounts
    7. Foreign mutual funds (PFICs) held in foreign retirement accounts
    8. Tax treaties as applied to foreign retirement accounts
  2. Information return reporting required for U.S. persons’ interests in foreign retirement accounts
  3. Other issues
    1. BSA reporting for U.S. persons’ interests in foreign retirement accounts
    2. Voluntary disclosure programs
  4. Case studies from practice


The panel will discuss these and other critical tactical issues:

  • Grantor vs. employee trusts: understanding the IRS' test and the arguments against it
  • The IRS' new 402(b) focus and when bifurcation is appropriate
  • Foreign pensions of highly compensated employees
  • Form 3520-A: when is it required along with 3520, FBAR, and 8938; penalty mitigation strategies
  • What happens with PFICs inside a foreign pension
  • How to use tax treaties
  • Whether or not to use a disclosure program to clean up past misreporting


Dunn, Stephen
Stephen J. Dunn

Dunn Counsel

Mr. Dunn practices federal and state tax law and tax controversies, and estate planning. His practice focuses on...  |  Read More

Mohammad, Usman
Usman Mohammad


Mr. Mohammad joined the firm in 2000. His practice areas include commercial litigation, tax controversies, and state...  |  Read More

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