Thank you. That is very helpful. I have one other question. When updating the foreign accounts section in turbo tax, it refers to two types of foreign financial assets: 1) Foreign Financial Accounts; and 2) what the IRS calls "Other Foreign Financial Assets." From the below I think I am correct in assuming that a UK Pension is considered an 'Other Foreign Financial Asset' rather than a 'Foreign Financial Account'?
A Foreign Financial Account includes:
- Any depository, custodial or securities account (bank account, savings account, mutual funds, etc.) maintained by a foreign financial institution
- Any equity or debt interest in a foreign financial institution (other than interested that are regularly traded on an established securities market)
- Any cash value life insurance or annuity contract maintained by an insurance company or other foreign financial institution
- This includes a financial account maintained by a financial institution that is organized under the laws of a U.S. possession (American Samoa, Guam, the Northern Mariana Islands, Puerto Rico, or the U.S. Virgin Islands
Other Foreign Financial Assets include any of the following that are held for investment and not held in an account maintained by a financial institution:
- Stock or securities issued by someone other than a U.S. person (including stock or securities issued by a person organized under the laws of a U.S. possession)
- Any interest in a foreign entity, including foreign pension plans, trusts, estates, corporations, partnerships, options and other derivative instruments, debt instruments, interest rate and other swaps or similar agreements
- Any financial instrument or contract that has an issuer or counterparty that is other than a U.S. person (including a financial contract issued by, or with a counterparty that is, a person organized under the laws of a U.S. possession)
Note: Real estate located in a foreign country is not considered a foreign financial asset.
