Specified Foreign financial Asset Form 8938 - Canadian employer sponsored retirement plan

[swongtax]

Does any one know if a Candadian employer sponsored retirement plan account (similar to a  401K account) is considered a reportable specified foreign financial asset on Form 8938?  Note that the taxpayer has not begun taking RMD yet.

I found this info on www.irs.gov:

How do I value my interest in a foreign pension or deferred
compensation plan for purposes of reporting this on Form 8938?
In general, the value of your interest in the foreign pension plan or deferred
compensation plan is the fair market value of your beneficial interest in the
plan on the last day of the year. However, if you do not know or have reason
to know based on readily accessible information the fair market value of your
beneficial interest in the pension or deferred compensation plan on the last
day of the year, the maximum value is the value of the cash and/or other
property distributed to you during the year. This same value is used in
determining whether you have met your reporting threshold.
If you do not know or have reason to know based on readily accessible
information the fair market value of your beneficial interest in the pension
plan or deferred compensation plan on the last day of the year and you did
not receive any distributions from the plan, the value of your interest in the
plan is zero. In this circumstance, you should also use a value of zero for the
plan in determining whether you have met your reporting threshold. If you
have met the reporting threshold and are required to file Form 8938, you
should report the plan and indicate that its maximum is zero.

[rbynaker]

I don't know for sure, but I have a client with one of these and he's able to get a statement every year with the value which we convert from CAD to USD and report on the 8938.  With the penalties so outrageous on these things I think it's safer to report something that isn't necessary than to omit something that's required.

Rick

If Jensen were here, he'd know for sure.

[itonewbie]

It is reportable for both FBAR and FATCA (i.e. F.8938).

Rev. Rul. 2014-55 only eliminates the annual reporting requirements for F.8891 and provides retroactive relief to those who failed to properly make an election based on prior guidance but emphasizes that FBAR and FATCA reporting are not affected by the Rev. Rul. So long as the applicable threshold based on filing status and residency is met, the account will be reportable.

[swongtax]

Thank you for your help!

This plan is clearly reportable on Form 8938, but I also found this on www.irs.gov, and it seems to explain that this type of retirement plan is not reportable on the FBAR. See below in BOLD BLUE.

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Who Must File

A United States person, including a citizen, resident, corporation, partnership, limited liability company, trust and estate, must file an FBAR to report:

1. a financial interest in or signature or other authority over at least one financial account located outside the United States if
2. the aggregate value of those foreign financial accounts exceeded $10,000 at any time during the calendar year reported.

Generally, an account at a financial institution located outside the United States is a foreign financial account. Whether the account produced taxable income has no effect on whether the account is a “foreign financial account” for FBAR purposes.

But, you don’t need to report foreign financial accounts that are:

• Correspondent/Nostro accounts,
• Owned by a governmental entity,
• Owned by an international financial institution,
• Maintained on a United States military banking facility, 
• Held in an individual retirement account (IRA) you own or are beneficiary of,
• Held in a retirement plan of which you’re a participant or beneficiary, or
• Part of a trust of which you’re a beneficiary, if a U.S. person (trust, trustee of the trust or agent of the trust) files an FBAR reporting these accounts.

You don’t need to file an FBAR for the calendar year if: 

• All your foreign financial accounts are reported on a consolidated FBAR. 
• All your foreign financial accounts are jointly-owned with your spouse and:
  • You completed and signed FinCEN Form 114a authorizing your spouse to file on your behalf, and your spouse reports the jointly-owned accounts on a timely-filed, signed FBAR. 

Sui

[PaulE]

I have been looking at this recently as a client came to me from a big four firm and included foreign pensions in their FBAR. The link below also suggests that foreign pensions need to be reported as they are an account:

https://www.goldinglawyers.com/reporting-foreign-pension-plans-fbar-lawyers-international-tax/

I believe that the reference to retirement plan covers 401k plans, SEPs, SIMPLE plans etc. and foreign pension plans do not fall within the IRS definition of retirement plan.

As well as the 8938 and FBAR there should also be a treaty disclosure for any gains on stocks held in a foreign pension plan as they are not included in income.

[itonewbie]

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@swongtax wrote:

Thank you for your help!

This plan is clearly reportable on Form 8938, but I also found this on www.irs.gov, and it seems to explain that this type of retirement plan is not reportable on the FBAR. See below in BOLD BLUE.

---------------------------

You don’t need to file an FBAR for the calendar year if: 

• All your foreign financial accounts are reported on a consolidated FBAR. 
• All your foreign financial accounts are jointly-owned with your spouse and:
  • You completed and signed FinCEN Form 114a authorizing your spouse to file on your behalf, and your spouse reports the jointly-owned accounts on a timely-filed, signed FBAR. 

---

Your understanding is not correct.  The account is reportable for FBAR purposes.  See Section 5.01 of the Rev. Proc. cited in my original response.  No one is filing a consolidated FBAR that include your client's Canadian retirement account and that account would not be among those jointly owned by a spouse who has an FBAR filing requirement.

[swongtax]

http://media.straffordpub.com/products/canadian-rrsps-rrifs-and-other-foreign-funded-retirement-plan...

I was able to find more info.  The link above is a presentation published in 2016, which explains the reporting requirements on FBAR and /or Form 8938 for different types of Canadian Registered Plans.

• Canadian RPP (are considered employer sponsored  401K plans) are not reportable on FBAR, but is reportable on FORM 8938.  (This is what my client has)

• Government sponsored - plans RRSP (i.e. IRA) are reportable on both FBAR and Form 8938.

• Tax Savings Accounts (i.e. ROTH IRA) are  reportable on both FBAR and Form 8938, and investment income is taxable in the US to the taxpayer/holder.

Am I reading the presentation correctly?

Sui

[swongtax]

https://www.irs.gov/businesses/small-businesses-self-employed/report-of-foreign-bank-and-financial-a...

This link directs you to the IRS website on FBAR filing info, which I posted in the past,

Who Must File

A United States person, including a citizen, resident, corporation, partnership, limited liability company, trust and estate, must file an FBAR to report:

1. a financial interest in or signature or other authority over at least one financial account located outside the United States if
2. the aggregate value of those foreign financial accounts exceeded $10,000 at any time during the calendar year reported.

Generally, an account at a financial institution located outside the United States is a foreign financial account. Whether the account produced taxable income has no effect on whether the account is a “foreign financial account” for FBAR purposes.

But, you don’t need to report foreign financial accounts that are:

• Correspondent/Nostro accounts,
• Owned by a governmental entity,
• Owned by an international financial institution,
• Maintained on a United States military banking facility, 
• Held in an individual retirement account (IRA) you own or are beneficiary of,
• Held in a retirement plan of which you’re a participant or beneficiary, or
• Part of a trust of which you’re a beneficiary, if a U.S. person (trust, trustee of the trust or agent of the trust) files an FBAR reporting these accounts.

So, it looks like the rule for Foreign IRA account reporting has changed.

[itonewbie]

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@swongtax wrote:

So, it looks like the rule for Foreign IRA account reporting has changed.

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FBAR reporting requirements have not changed.  It could be position the presenter takes.  You'd have to take a decision whether to follow that position (even though no citation was provided), taking into the penalty provisions, and advise your client accordingly.