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Do UK workplace group personal pensions need to be reported on FBAR?

Do UK workplace group personal pensions need to be reported on FBAR?

Old Jul 22nd 2014, 1:53 am
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Default Re: Do UK workplace group personal pensions need to be reported on FBAR?

Originally Posted by zuluswede
So in looking for an explanation, it seems to me then, that UK "defined benefit" pension schemes are exempt from FBAR if you can show you have no way of personally directing the investments of your "portion" of the fund from which your benefit will be paid at NRD. Since the scheme is managed by the "employer" or an entity designated by the employer as a "whole" there is no "account" or "portion" that you can control through either verbal or written communication and hence have no "signature of authority".

Except that you're never going to be asked to "show" anything. Because the question will never be asked. Really - although FBAR etc, needs to be respected, the IRS/Treasury are not trying to find trivial mistakes/omissions on FBAR. Despite all the scaremongering on various forums.

Last edited by JAJ; Jul 22nd 2014 at 2:46 am.
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Old Jul 22nd 2014, 2:26 am
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Default Re: Do UK workplace group personal pensions need to be reported on FBAR?

Originally Posted by JAJ
Except that you're never going to be asked to "show" anything. Because the question will never be asked. Really - although FBAR etc, needs to be respected, the IRS/Treasury are not trying to find trivial mistakes/omissions on FBAR. Despite all the scaremongering on various forums.
You are my favourite poster on this issue, JAJ; I really like your calm, sensible approach, reining us all back in

For 2013, I did:

FBAR: surpassed the $10k limit just on UK bank accounts alone. Did two FBARs for hubby and I, with his sole accounts on his, my sole accounts on mine, joint accounts on both. For pensions, we did the defined contribution ones but ticked the 'Value not known' box; we left off the defined benefit (final salary) ones as we don't have signatory authority to control the assets of those. I'm still not entirely convinced any pensions need FBAR reporting, as per what our Big Four firm told us last year, but since we had to do it anyway figured I may as sling them in. I will have to do FBAR again for 2014 just on cash alone, so will include them again, and after that I'm hoping more clarification will emerge over the next couple of years.

8938: didn't file this year. Didn't have anywhere near enough UK cash to trigger the $100k filing threshold for joint filing. The combined pensions are probably on the cusp of triggering a reporting requirement - I didn't actually do the calculations - but the IRS tells me that if the value of a foreign pension plan isn't easily ascertainable (and it's not realistic to know the value of stock-fluctuating retirement accounts down to the dollar over an entire calendar year, and the instructions suggest the truth of 'not known' is better than blindly guessing), I can put $0. And I can use that $0 value to determine whether filing is required or not. (Which all needs me to suspect they don't care overmuch about retirement accounts anyway, unless they're recently suspiciously enormous, or in the distribution stage, or some such.) So - no need to file. All the pensions, including the final salary ones, went on last year's 8938, as we had a lot of cash then, pre-house buying. It's not like I'm in any way trying to hide them from the authorities, and I shall be perfectly willing to pay tax properly once it's due.

In conclusion, I'm happy I'm either doing it right, or close enough to right that I can do a confused face and plead ignorance and best endeavours in the light of a complicated law, not evasion.
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Old Jul 22nd 2014, 3:01 am
  #93  
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Default Re: Do UK workplace group personal pensions need to be reported on FBAR?

Originally Posted by kodokan
The combined pensions are probably on the cusp of triggering a reporting requirement - I didn't actually do the calculations - but the IRS tells me that if the value of a foreign pension plan isn't easily ascertainable (and it's not realistic to know the value of stock-fluctuating retirement accounts down to the dollar over an entire calendar year, and the instructions suggest the truth of 'not known' is better than blindly guessing), I can put $0. And I can use that $0 value to determine whether filing is required or not. (Which all needs me to suspect they don't care overmuch about retirement accounts anyway, unless they're recently suspiciously enormous, or in the distribution stage, or some such.)

On a DC retirement plan you should receive statements with the value and I would use the end of year balance on you FAR or 8938 if required.

Apart from the tax issues I worry about you lack of interest or management in your pensions. This is all too common. Please know the balance and asset allocation of any DC plans you have and make sure you rebalance when necessary. For your DB plans you should find out the expected income at retirement as this fixed income source should be factored into your planning.
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Old Jul 22nd 2014, 3:45 am
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Default Re: Do UK workplace group personal pensions need to be reported on FBAR?

Originally Posted by nun
On a DC retirement plan you should receive statements with the value and I would use the end of year balance on you FAR or 8938 if required.

Apart from the tax issues I worry about you lack of interest or management in your pensions. This is all too common. Please know the balance and asset allocation of any DC plans you have and make sure you rebalance when necessary. For your DB plans you should find out the expected income at retirement as this fixed income source should be factored into your planning.
Thanks nun, I appreciate your concern. But if you met me, and saw my lifetime spreadsheet and early retirement plan, you'd worry less

Balance - I know it rounded to the nearest thou for my DC plan, and the projected few hundreds of dollars of income for my DB plan. Hubby has recently got around to actually giving his pension co's our US address, rather than his parents' (these are OLD pensions), so I'll have more accurate numbers going forward. Even so, I can't honestly say that a number they send us once a year in, say, July, is the highest calendar year figure. 'This number' is surely no more or less reliable than 'value not known'.

Asset allocation - they're in the lowest fee possible UK/ emerging markets index trackers, and considered as the foreign stock part of my portfolio balancing. I know it sounds like I'm not interested in them, but that's because I already made sure they're in the best possible in-house investments years ago when we lived in Switzerland, given that I have no other options about transferring them where there might be better investment choices (we tried; no UK company would set up an account for us as were no longer UK resident).

So I've done everything I can, and they're really not a big part of my retirement planning at this stage, and are mostly just a chore. Nice of you to be concerned though, it's good of you to flag it up just in case.
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Old Jul 22nd 2014, 12:33 pm
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Default Re: Do UK workplace group personal pensions need to be reported on FBAR?

Originally Posted by kodokan
... lifetime spreadsheet ...
.
I'm avoiding drawing up one of those. I'm afraid I'd open it up one day to find all the lines and columns totaled....
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Old Jul 22nd 2014, 12:38 pm
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Default Re: Do UK workplace group personal pensions need to be reported on FBAR?

Originally Posted by kodokan
Thanks nun, I appreciate your concern. But if you met me, and saw my lifetime spreadsheet and early retirement plan, you'd worry less

Balance - I know it rounded to the nearest thou for my DC plan, and the projected few hundreds of dollars of income for my DB plan.
That's good, you should be able to easily fill in the value estimates on the FBAR and 8938.
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Old Jul 22nd 2014, 1:03 pm
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Default Re: Do UK workplace group personal pensions need to be reported on FBAR?

Originally Posted by JAJ
Except that you're never going to be asked to "show" anything. Because the question will never be asked. Really - although FBAR etc, needs to be respected, the IRS/Treasury are not trying to find trivial mistakes/omissions on FBAR. Despite all the scaremongering on various forums.
Thanks again for your comments JAJ. I'm really grateful for you and others who have given time and effort to this. Definitely sleeping much better these days...
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Old Jul 22nd 2014, 3:37 pm
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Default Re: Do UK workplace group personal pensions need to be reported on FBAR?

Originally Posted by nun
That's good, you should be able to easily fill in the value estimates on the FBAR and 8938.
FBAR says I can use annual statements if they fairly reflect the highest value (imprecise, and I have no idea if they do), but it also says to round an account's value up to the nearest whole dollar (very precise number required). It also gives a tick box for 'value not known'. So there are a selection of options on what's best to do. Value not known is the only one I can genuinely and precisely tick; anything else is ambiguously guessing without analysing a year's worth of investment, and I don't have the data available to do that. I see this as the equivalent of only answering the exact question that Border Control ask, not trying to guess what you think they want to know. Do I KNOW if the statement reflects the highest value, in the context of them asking for numbers rounded to single dollars? No, so I tick 'not known' - can't be wrong that way. My Big Four prepper last year categorically told me the pensions didn't even need to be on FBAR, remember, so I'm unconvinced anyone will care overmuch what I put.

8938 says that for foreign retirement accounts specifically, I can put $0 if the highest value isn't easily available - nothing in these instructions about using annual statements, and the exact highest value arguably isn't 'easily' available - and then use that $0 to determine if filing is even required. So I like that route as it will negate the need to ever file 8938 without my having to calculate anew every year if we've crossed the threshold or not (we're never going to hit it now on cash). Again, last year we were told $0 is completely fine for pensions, in a tone - I quizzed them a LOT on this - that bordered on 'oh for heaven's sake, no one cares, the authorities truly aren't bothered about a few time-locked dead pensions from your 20s'.

Overall, my reading of combination of the instructions and our paid-for advice previously is 'yes yes, best to go through the motions of reporting them as required, but ancient 'normal course of life' foreign retirement plans are not the target here'. 'Easily' available values... well, it's entirely subjective, isn't it? I don't think it's remotely easy for me to contact a pension company with an 8 hour time discrepancy, and try to get them to send me a piece of information (highest value at any point in the calendar year) that they don't need to store or report for their local market, which works on a completely different tax year anyway. I'm not being asked to estimate or make my best guess, I'm being asked if the value is easily available, and if not, to put $0. So I do.

Over the course of a couple of years of reporting, I've given the authorities a list of all the accounts, one way or another. I'll let you know if I ever get asked for more details.
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Old Jul 22nd 2014, 4:13 pm
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Default Re: Do UK workplace group personal pensions need to be reported on FBAR?

Originally Posted by kodokan
FBAR says I can use annual statements if they fairly reflect the highest value (imprecise, and I have no idea if they do), but it also says to round an account's value up to the nearest whole dollar (very precise number required). It also gives a tick box for 'value not known'. So there are a selection of options on what's best to do. Value not known is the only one I can genuinely and precisely tick; anything else is ambiguously guessing without analysing a year's worth of investment, and I don't have the data available to do that. I see this as the equivalent of only answering the exact question that Border Control ask, not trying to guess what you think they want to know. Do I KNOW if the statement reflects the highest value, in the context of them asking for numbers rounded to single dollars? No, so I tick 'not known' - can't be wrong that way. My Big Four prepper last year categorically told me the pensions didn't even need to be on FBAR, remember, so I'm unconvinced anyone will care overmuch what I put.

8938 says that for foreign retirement accounts specifically, I can put $0 if the highest value isn't easily available - nothing in these instructions about using annual statements, and the exact highest value arguably isn't 'easily' available - and then use that $0 to determine if filing is even required. So I like that route as it will negate the need to ever file 8938 without my having to calculate anew every year if we've crossed the threshold or not (we're never going to hit it now on cash). Again, last year we were told $0 is completely fine for pensions, in a tone - I quizzed them a LOT on this - that bordered on 'oh for heaven's sake, no one cares, the authorities truly aren't bothered about a few time-locked dead pensions from your 20s'.

Overall, my reading of combination of the instructions and our paid-for advice previously is 'yes yes, best to go through the motions of reporting them as required, but ancient 'normal course of life' foreign retirement plans are not the target here'. 'Easily' available values... well, it's entirely subjective, isn't it? I don't think it's remotely easy for me to contact a pension company with an 8 hour time discrepancy, and try to get them to send me a piece of information (highest value at any point in the calendar year) that they don't need to store or report for their local market, which works on a completely different tax year anyway. I'm not being asked to estimate or make my best guess, I'm being asked if the value is easily available, and if not, to put $0. So I do.
I would not take the same approach. As you have said before you know the balance of your accounts and track them with a spreadsheet. It seems straight forward to enter good faith estimates of their value rather than defaulting to zero.
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Old Jul 22nd 2014, 4:23 pm
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Default Re: Do UK workplace group personal pensions need to be reported on FBAR?

I agree that it doesn't really matter, and FBAR is just one part of a tax code designed to enrich tax preparers at the expense of the ordinary US person, while also allowing all sorts of tax avoidance loopholes for the rich.

However, it seems pretty clear the the most reasonable estimate available to you of the maximum value of your pension account is the single value you have on your statement. Zero is a less reasonable estimate.

All examples I have seen for reporting as zero are things where you really do have no idea what assets are there, with the examples quoted being defined benefit pension schemes, or equity in companies that are not publically listed.
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Old Jul 22nd 2014, 5:26 pm
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Default Re: Do UK workplace group personal pensions need to be reported on FBAR?

Originally Posted by Owen778
However, it seems pretty clear the the most reasonable estimate available to you of the maximum value of your pension account is the single value you have on your statement. Zero is a less reasonable estimate.

All examples I have seen for reporting as zero are things where you really do have no idea what assets are there, with the examples quoted being defined benefit pension schemes, or equity in companies that are not publically listed.
But I'm not being asked for an 'estimate' on either form.

FBAR wants 'maximum account value' rounded to the nearest dollar, but agreed, it does also suggest that annual statements can be used, and I might start using the statement values next year once I actually have up to date ones for all the pensions. I'm still not entirely convinced that pensions are needed on FBAR at all, as this is what we were advised for 2012. I have another UK expat friend who arrived here a year or so later than us, so they would have had their 2013 taxes/ FBARs prepared by the same multinational Big Four on the same relocation deal; I shall ask her what they were advised to do this time round. Either way, I'm sure it's not that important and that 'I acted on a blend of the paid advice I received last year combined with attempting to follow the instructions myself this year, but I was clearly making no attempt to hide any accounts' is good enough.

8938 wants 'fair market value on the last day of the year' for retirement accounts, but then as good as says if you don't happen to have this to hand AND haven't taken any distributions, then we're really not that interested as we know they're inaccessible accounts anyway, and you can use $0, and probably not even bother with this form if these are your only foreign accounts:

"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."

Nothing about annual statements or estimates here. I don't know the values as of the 31st December, and haven't taken any distributions, and if I put $0 as it seems happy to let me do, then I never again need to file 8938, and don't have to worry that one year the investments might total $100,001. And again, we were explicitly asked/told last year 'Did you receive any distributions..? No? Ok, in that case you can just put $0 for pensions'.

Sigh... No one in authority is ever going to care about this nearly as much as we do, are they?!
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Old Jul 22nd 2014, 5:42 pm
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Default Re: Do UK workplace group personal pensions need to be reported on FBAR?

Originally Posted by kodokan
Sigh... No one in authority is ever going to care about this nearly as much as we do, are they?!


Like many other parts of US law, the only time it matters to them is if it helps them get you when they think you're guilty of something more serious.
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Old Jul 22nd 2014, 5:46 pm
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Default Re: Do UK workplace group personal pensions need to be reported on FBAR?

Originally Posted by Owen778


Like many other parts of US law, the only time it matters to them is if it helps them get you when they think you're guilty of something more serious.
Ah, the 'Al Capone' approach to law enforcement.
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Old Jul 22nd 2014, 6:41 pm
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Default Re: Do UK workplace group personal pensions need to be reported on FBAR?

Originally Posted by kodokan
Ah, the 'Al Capone' approach to law enforcement.
Indeed.

There is the other common US approach though, "do whatever will make us money from fines"...
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Old Jul 22nd 2014, 6:55 pm
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Default Re: Do UK workplace group personal pensions need to be reported on FBAR?

Originally Posted by Owen778
Indeed.

There is the other common US approach though, "do whatever will make us money from fines"...
Too true. However, since our Big Four firm appears to be telling presumably thousands of their clients in the UK and Stateside to leave pensions off FBAR and gaily scatter $0s throughout, there will be LOTS of very cross, very senior multinational exec types taking umbrage at that approach!
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