FBAR and Final salary pension scheme

So I am a part of a fianl salary pension scheme and I have tried to get information about it, but it just doesn't seem to fit with reporting to FBAR. 

But it seems like the people who administer it are not paying attention when I ask them questions.  (For instance they wanted to see the form, looked at it and said it doesn't say you need to report pensions. Sigh.)

Basically, it isn't an account.  It has no value until I retire at which point I get X amount of my fianl salary, depending on when I retire.  Like if I were to retire right now I'd get 1/33 of my salary. 

I suppose it isn't any different from the state pension.  It isn't as if I have an "account" with the state that I can jsut report.

Has anyone else run into this issue?

Thanks!

Employer-administered schemes do no require FBAR reporting.

Hooray!  Thanks.

 I've been going nutty and the people the pension office gave the ever helpful advice of "Since you are earning the money in the UK I don't see why you need to file taxes in the US at all."  Ummmmm, yeahhhhhh. 

I've been submitting the FBAR for several years and have never included my UK Final Salary Pension because it simply does not fall within the scope of the FBAR.  (In my considered opinion.) While there is no wording in the instructions that specifically excludes Final Salary Pension Schemes, I'd say that the definition of a financial account (first para under "General Definitions") implicitly excludes them as they don't have a cash value...

I see nothing in the FBAR Regulations published in 2011 that exempts defined benefit pension plans from FBAR reporting. The prudent answer would be to disclose.

As usual, the regulations are intentionally vague, so nobody knows for sure.

As a practical matter, only two types of people have been bitten by FBAR:

1. Genuine, big time, US resident tax evaders.

2. Those foolish enough (sometimes with professional advice) to enter the various voluntary disclosure programs.

guya, you think people should disclose Tesco clubcard points!

Reading this I would not include a final salary pension plan, but I'd make sure that it was a "tax qualified plan" according to the IRS and make a Treaty argument.

http://www.irs.gov/businesses/small/article/0,,id=148849,00.html

'Exceptions to the Reporting Requirement

Exceptions to the FBAR reporting requirements can be found in the FBAR instructions. There are filing exceptions for the following United States persons or foreign financial accounts:

Certain foreign financial accounts jointly owned by spouses;
United States persons included in a consolidated FBAR;
Correspondent/nostro accounts;
Foreign financial accounts owned by a governmental entity;
Foreign financial accounts owned by an international financial institution;
IRA owners and beneficiaries;
Participants in and beneficiaries of tax-qualified retirement plans;
Certain individuals with signature authority over but no financial interest in a foreign financial account;
Trust beneficiaries; and
Foreign financial accounts maintained on a United States military banking facility.
Look to the FBAR instructions to determine eligibility for an exception and to review exception requirements."

Taken from the the latest FBAR:

"IRA Owners and Beneficiaries. An owner or beneficiary of an IRA is
not required to report a foreign financial account held in the IRA.
Participants in and Beneficiaries of Tax-Qualified Retirement Plans.
A participant in or beneficiary of a retirement plan described in Internal
Revenue Code section 401(a), 403(a), or 403(b) is not required to report
a foreign financial account held by or on behalf of the retirement plan"

My reading is that if you have an IRA or 401(k) and part of your internal investment(s) is "foreign", (perhaps shares in an Indian rail road company), you do not need to report this "foreign part". The custodian of your retirement account have a preexisting relationship with the IRS anyway.

Going back to the subject matter. If you can dispose of the assets in the account by providing your signature, then it's reportable, it's your account, you own it... If you don't own the account or can't dispose of the assets as you don't have signature authority, then it's not reportable, it's not your account. The U.K old age pension is a good example, you wish to take benefit at retirement, but can't say to the government, give me all that money on my record!

I was under the impression that no foreign/UK pensions were likely to meet the criteria as 'qualified plans'. Is this wrong?

guya, you think people should disclose Tesco clubcard points!

Well, I DO report my TfL Oyster card, because it has a specific cash value that can be discovered & reported (I can stick it in a machine at a tube station, it tells me a value in Pounds...)  My final salary pension plan has no cash value at this point as far as I'm aware. 

Not wanting to get off subjest, the U.S and U.K tax treaty is in my view the most comprehensive, more so then of any other country of which the U.S has a treaty.

There are other posts that go into opinion and greater detail. Briefly though.

Corresponding Pension Schemes. The Notes to the Tax Treaty state that “corresponding pension schemes” include:

In the UK: (1) Approved employment-related retirement benefit schemes (for purposes of Chapter 1 of Part XIV of the Income and Corporation Taxes Act of 1988) and (2) Personal pension schemes approved under Chapter IV of Part XIV of such Act).

In the US: (1) Qualified plans under IRC § 401(a), e.g., 401(k) plans, (2) Individual Retirement Accounts (including traditional, SEP and Roth IRAs) and (3) Qualified plans under IRC § 403(a) and (b).

If you get tax relief from HMRC or the IRS it's a good indicator that it's qualified and therefore approved as a  “corresponding pension schemes”.

Corresponding Pension Schemes. The Notes to the Tax Treaty state that “corresponding pension schemes” include:

In the UK: (1) Approved employment-related retirement benefit schemes (for purposes of Chapter 1 of Part XIV of the Income and Corporation Taxes Act of 1988) and (2) Personal pension schemes approved under Chapter IV of Part XIV of such Act).

In the US: (1) Qualified plans under IRC § 401(a), e.g., 401(k) plans, (2) Individual Retirement Accounts (including traditional, SEP and Roth IRAs) and (3) Qualified plans under IRC § 403(a) and (b).

If you get tax relief from HMRC or the IRS it's a good indicator that it's qualified and therefore approved as a  “corresponding pension schemes”.

That's where I was going. I'd argue that a UK final salary pension plan is a qualified pension because of the Tax Treaty and so no FBAR is required.

As always, my opinion only:

Pension benefits, as described by Article 17 (and therefore references to Article 3) for a USC from a UK source qualified defined benefit pension plan, are taxable by the US. The fact that the plan is a resident UK plan does not exempt it from reporting.
 
Other issues on 1040 deal with qualified pension plans, such as the required methods for determining costs associated with pension benefits. There are two methods, simplified and the general rule. Does automatically extending Article 17 or Article 18 to cover the definition of a qualified plan for the purposes of 1040, line 16 (or 21) allow the use of the simplified method for computing the costs of a UK defined benefit pension plan?

For FBAR, my question would be: Does a foreign (UK) defined benefit pension plan meet the definitions described in Internal Revenue Code section 401(a), 403(a), or 403(b)? (Not all US pension plans are qualified for 1040, line 16.) It would appear that any other definition does not apply.

For FBAR, my question would be: Does a foreign (UK) defined benefit pension plan meet the definitions described in Internal Revenue Code section 401(a), 403(a), or 403(b)? (Not all US pension plans are qualified.) It would appear that any other definition does not apply.

Again IMHO:

The OP should already be including their UK final salary pension scheme on their US taxes.
Whether an FBAR is required depends on how they deal with the pension. If they claim (and get) the treaty exemption on the pension then the IRS has recognized it as a qualified plan and the OP would not need to file an FBAR.

However, if the OP does not claim the treaty exemption they would have to pay US tax on any contributions and presumably it would be taxed as a foreign trust. Then the valuation questions start to be relevant and FBAR would have to be filed too.