Pension, Annuity calculation....
Apr 24th 2018, 11:12 am
#1
Forum Regular
Thread Starter
Joined: Feb 2018
Posts: 111
Pension, Annuity calculation....
OK...feeling like an idiot - but will venture a question.
I am trying to workout how the IRS advise people to calculate the value of their annuity, pension etc?
I am mostly concerned about this in respect of expatriation - net worth terms.
I have convinced myself it is a matter of how much you get each year x life expectancy via mortality tables?
Can anyone who has done this share how they did it....I am hitting a brick wall when looking for this online or it is possible I just don't "get it" when i see it...I think i am having a senior moment!
I am trying to workout how the IRS advise people to calculate the value of their annuity, pension etc?
I am mostly concerned about this in respect of expatriation - net worth terms.
I have convinced myself it is a matter of how much you get each year x life expectancy via mortality tables?
Can anyone who has done this share how they did it....I am hitting a brick wall when looking for this online or it is possible I just don't "get it" when i see it...I think i am having a senior moment!
Apr 24th 2018, 1:55 pm
#2
BE Forum Addict
Joined: Apr 2011
Location: The Shire
Posts: 1,117
Re: Pension, Annuity calculation....
Form 8854 does not include any instructions as to how a pension or annuity is valued. What is also unwritten is that for 877A (Exit Tax) determining whether or not you are a 'covered expatriate', you use the Gift Tax rules.
http://www.unclefed.com/Tax-Bulls/1997/Not97-19.pdf
You are not having a senior moment, only trying to make sense out of an IRS form that, basically, makes no sense. Welcome.
For the 'balance sheet' of 8854, the instructions say you will not need proof as to how you arrived at your figures. If the IRS disagree with the figures, they will challenge you. Therefore, you decide how to value the pension/annuity. It may be acceptable, or it may not be acceptable, but it can be used as a declared figure which you may, in the future, have difficulty in reducing in value. No, that doesn't make sense, but.....
There is an IRS page that deals with valuing annuities, and some persons expatriating have used these.
https://www.irs.gov/retirement-plans/actuarial-tables
Practically, if it is a defined benefit pension, it will have a current value. Use this. If it is an annuity, it may also have a current value. Use this. If it is something else, or has no immediately determinable value, use your best judgement.
http://www.unclefed.com/Tax-Bulls/1997/Not97-19.pdf
You are not having a senior moment, only trying to make sense out of an IRS form that, basically, makes no sense. Welcome.
For the 'balance sheet' of 8854, the instructions say you will not need proof as to how you arrived at your figures. If the IRS disagree with the figures, they will challenge you. Therefore, you decide how to value the pension/annuity. It may be acceptable, or it may not be acceptable, but it can be used as a declared figure which you may, in the future, have difficulty in reducing in value. No, that doesn't make sense, but.....
There is an IRS page that deals with valuing annuities, and some persons expatriating have used these.
https://www.irs.gov/retirement-plans/actuarial-tables
Practically, if it is a defined benefit pension, it will have a current value. Use this. If it is an annuity, it may also have a current value. Use this. If it is something else, or has no immediately determinable value, use your best judgement.
Apr 26th 2018, 3:15 am
#3
Forum Regular
Thread Starter
Joined: Feb 2018
Posts: 111
Re: Pension, Annuity calculation....
I appreciate the pointers....more reading ....I do think once the annuity paperwork is settled it will have a yearly figure....so i think i will keep it a simple as I can....doing my best to liquidate as much as I can to make the maths a bit easier.
