FBAR and Final salary pension scheme

No penalty for reporting something you don't need to. My view is: if in doubt... Report...

On a philosophical note this is where my latent libertarian comes out. The rules are so poorly written and the fines so high that we are now afraid not to include accounts.

I hear you 100% 

Pension plans are reportable in part II section 8, (it's not stock).

Yes, but is it an interest in a foreign entity (for 7)? If it's 8, then we get into issuers and counterparties. Care to elucidate?

The rules are so poorly written and the fines so high that we are now afraid not to include accounts.

I'm willing to include anything that is required. If Congress demands we file, they could at least provide the information that clearly tells us what, where, and how. I think I've reached saturation point on the whole mess.

This is my 5 star best comment of the month. It comes from 'Moxie', in a post on the British Expats site. They had a query about Form 8938 and called the IRS help line:

"So I decided to call the IRS about the specifics of the form after I had already read everything on the internet about it. When the lady said "this is the first time I've seen this form so bear with me while I read up on it".---well I knew she wasn't going to be helpful."

http://britishexpats.com/forum/showthread.php?t=746761&page=3

"Yes, but is it an interest in a foreign entity (for 7)? If it's 8, then we get into issuers and counterparties. Care to elucidate?"

Part II is rather like a test, choose the best answer! It was decided to mark it as issuer

When I called the IRS they told me to speak to my accountant... They had NO idea, even after going through many people. You do your best...

Thanks Barcrest. It seems filing a return has become a multiple choice exercise for everyone.

I just spoke to a very nice lady on the FBAR hotline. The critical thing to them is whether the plan is a trust. As has been mentioned before the IRS and Treasury agree that most foreign pensions are foreign trusts. She asked me to email the question to her attention and she'd give me a written answer.........but this would seem to be highly applicable to our discussion.

http://www.ngelaw.com/files/Publication/b8534715-e1ed-406e-b8a7-86b4040af3a1/Presentation/PublicationAttachment/5987fa14-1424-4ea9-b954-65c5db56b1a5/JPTE.CCH.Sept.Oct.2009.Richman.pdf

and

http://www.assetlawyer.com/wordpress/?p=955

"Foreign Trusts
     U.S. taxpayers who are grantors (also known as settlors) of foreign trusts are deemed to be the owners of all trust assets for tax purposes. Thus, the FBAR filing requirement applies to such grantors, whether or not they actually control trust assets and whether or not they receive distributions from the trust.

     Recently promulgated regulations extend the FBAR requirement to some U.S. beneficiaries of foreign trusts, such as foreign insurance trusts. The new regulations apply to U.S. beneficiaries of a foreign trust who have a reportable financial interest in the trust. A U.S. person has a reportable financial interest if the U.S. person had more than a fifty percent (50%) present beneficial interest in a trust’s assets or if the U.S. person received more than fifty percent of the current income of the trust. The beneficial interest in the assets of the trust must be a “present” beneficial interest for the FBAR to apply. A beneficiary of a purely discretionary trust, i.e., where trust distributions are made solely in the discretion of a trustee does not have a “present” interest. However, with respect to the trust income, a beneficiary who receives more than fifty percent of trust’s “current” (i.e., annual) income has a financial interest that is reportable on the FBAR.

     Under prior FBAR regulations, there was ambiguity as to whether a discretionary trust beneficiary was subject to the FBAR. Beneficiaries of a foreign discretionary trust may only receive distributions at the discretion of the foreign trustee. The new rules clarify that only a present beneficial interest gives rise to the FBAR and only beneficiaries who receive more than fifty percent of a trust’s current income are subject to the FBAR.

     Foreign trusts also give rise to filing IRS Forms 3520 and 3520-A. Please see our memorandum, IRS Reporting Requirements for Foreign Trusts."

Clearly we should report absolutely everything on FBARs - Oyster cards, Nectar Cards, Gift Cards, credit on your Amazon account, the tenner your friend owes you, change down the back of the couch etc.

The nice folks in Detroit are having trouble keeping up - apparently they are at least six months behind in processing:

http://hodgen.com/fbars-and-delays-in-detroit/

Clearly we should report absolutely everything on FBARs - Oyster cards, Nectar Cards, Gift Cards, credit on your Amazon account, the tenner your friend owes you, change down the back of the couch etc.

The nice folks in Detroit are having trouble keeping up - apparently they are at least six months behind in processing:

http://hodgen.com/fbars-and-delays-in-detroit/

Swamp the system, eh. Maybe if we do that the IRS/Treasury will recognize the duplication of effort in FBAR and FATCA and drop the FBAR.

Here is my question to Fbarquestions@irs.com and the answer, make of it what you will

"I have a question about whether FBAR filing is required by a US citizen who is the beneficiary of two types of UK final salary pension plans; the UK University Superannuation Scheme (USS) pension plan and a UK employer sponsored final salary pension plan.

The USS plan (http://www.uss.co.uk)  is a final salary pension plan and is organized in the UK as a trust. There's no ability to direct investments by the beneficiaries. The university and the beneficiary put in a percentage of salary and then at retirement age (usually after 55) the pension is calculated according to years of service and final salary.

The employer sponsored plan (http://www.pensionsadvisoryservice.org.uk/workplace-pension-schemes/final-salary-schemes) is also a final salary pension plan and is organized in the UK as a trust. There's no ability to direct investments by the beneficiaries. The employer and the beneficiary put in a percentage of salary and then at retirement age the pension is calculated according to years of service and final salary."

Here is the IRS answer

"Dear Sir:

Defined benefit retirement accounts held by employers or governments do not generally need to be reported by the individual. These are generally NOT held in the individual's name.  However, foreign defined contribution retirement accounts held by the individual (similar to IRA) should be reported.   These accounts are generally held in the individual's name, so meet the #1 Financial Interest definition in the instructions to the form.

It sounds like you a have a defined contribution account.  Even though you cannot access it prior to age 50, it is still being held in your name or for your benefit.  As such, it meets the definition of a financial interest as stated in the instructions to the FBAR form.  You would file if the threshold and other requirements for filing are met."

So, if it's a workplace account like a 401(k), it not reportable. A none workplace account like an IRA is. It then goes on to say that a defined account is not reportable in the first paragraph, but in the second it is... Simple questions, not so simple reply.

The only thing I can see from the reply is If that if the account is in your name report, if in your employers name then don't report.

Thanks for sharing!

Yes. I was a bit confused too. Maybe the OP can tell us if they ever see an account statement with their name on it.

Swamp the system, eh. Maybe if we do that the IRS/Treasury will recognize the duplication of effort in FBAR and FATCA and drop the FBAR.

Maybe it is a bit passive aggressive, but for the last several years I have reported my TfL Oyster Card with full details of the balance, the full mailing address of TfL etc.  But I don't want to cause any confusion over at the US Treasury, or the IRS.  So, with the Form 8938 I'm now at the design stage of my "continuation sheet" for part 1 (I have five bank accounts to report.)  The continuation sheet should include "the same information for each additional account."  I'm planning on writing it out longhand on college-ruled paper, but should I write out all the check-boxes in question 3 and question 6? Or should I just include the one check-box in each case (the box I plan to check that is.)

Nope. I get like reports that everyone gets.  The booklet that talk about the organisation and this is the president and don't I look awesome sitting on my desk, or whatever. 

But not a statement with an amount and this is USS. 

But I know that a few years before people are of retirement age they get letters saying this is how much you will get. 

When I asked for something that gives an amount now, they said they couldn't do it?

Can I even report it on the FBAR if it doesn't have an amount?  What do I even put? This is the first year I need to file it. 

I think I will be right on the border with my other accounts, but what the heck do I do with an account that has no value?

My husband feels that the first paragraph is fact.  This is the law and the second paragraph is the person's opinion.

It "sounds" like sounds like someone's musings, as opposed to fact.