Foreign Employee Pension

[pk]

@user17636035548 , do you have a question on foreign pension for a US person ?   What type ?  From which country ?  Are you a citizen of that country ?

Please more info you provide the more focused the answer will be .   If you wish you can send me PM  ( just NO PII -- Personally Identifiable Information) --- keeps the interaction/info away from general users.

[user17636035548]

My foreign employee pension is a United Kingdom based pension of one of the largest companies in the UK as I have lived in the UK for many years and have worked for them for almost two decades and I am a US and UK citizen. It is a defined contribution scheme of one of the largest pension providers in the UK and is part of a Master Trust run by the pension provider and looked after by a trustee, with my employer contributing more into the scheme than I do each month.  I have completed Part VI of Form 8938, but am not sure if I have done so correctly.  As AI and the IRS helpline advised me that my pension is an interest in a foreign entity so I filled out line 35, but two accountants said I should have filled out line 36 instead, but they gave me inappropriate answers as to why, as one said they do not know why and the other one said because it is not stock in a foreign entity and I am making too much of the fact that they included the wording "or interest in a foreign entity as well".  But I am not sure how I can be making too much of the fact that they included that wording as if the IRS had wanted me to ignore it they would have not put it on the form to begin with.  So I should think the main question is if the workplace pension is an interest in a foreign entity or not?  Although the pension provider has sent me a link to an HMRC government website which states that the UK and USA have an agreement that UK workplace pension providers do not have to comply with FATCA reporting. So it does not have a GIIN number. But at the same time I do not know if you would call it an issuer or counterparty either. Looking forward to your response. With a logical reason why it is one or the other.

[user17636035548]

I already sent you a response on Thursday, but have not received an answer yet.  Since then I have also noticed that on page 8 of the instructions it says Do not separately report the assets held by the plan, but I take that to mean you do not have to declare the individual funds the pension invests in, rather than not having to fill out line 35 or 36.  Please kindly advise me the answer to my original question and if I am correct about what I just read.

[pk]

@user17636035548 

First thank you for your post with all the answers to my questions.

Second, please accept my apologies for delayed response. 

Part of the delay is my struggle with  unclear directions from the form 8938 instructions. While I recognize that despite  Under  model 1/2 IGA between US and UK there  is no requirement for the UK pension admin / trust to report  the holding to the US-IRS/ Treasury. However, this does not  abate the requirement for the beneficiary/ pensioner from reporting under FATCA regs. 

The question then  ( and because of the distributed/ contorted information gathering on the form )  is how to report this "pension " account.   If one looks at IRC section  1471-5 for definitions used  in FATCA regs, I am more inclined to report a pension account like an annuity i.e. under custodial account .  This is in contrast to your information of reporting as a trust ( see definition in the above ref 26.USC 1471-5... ).

Since the whole idea of FATCA is to detect/ avoid money laundering through  "specified foreign  financial assets/ accounts",   all one is required to do is generally report the holding but generally under  headings as defined  under section ref'd above.  So my view is  to report the pension account as a custodial account. The pension fund is holding your monies ( your contribution & that of your employer ) and investing and growing for future "annuity" type of payment to you as beneficiary.

This would mean that  line 20 -- Custodial;  line 21 -- is  your account identification  at the pension fund admin

26a -- Name of the fund admin;  26b is blank or  the IGA model  1 or 2 ( as the case may be )

I do not agree that this should be reported as a trust where you own a specific share etc.

That is my take on this.  Is there more I can do for you ?

[user17636035548]

Thank you for your answer.  The only problem with it is that on Page 8 of the Instructions for Form 8938 it specifically says that the pension has to be put in Part VI rather than Part V. So I can not report it as a custodial account.

[pk]

@user17636035548  agreed  about the contents of page 8 and page 9 of the ref'd  document.  All they are looking for is that (a) recognition that a foreign financial account exists, (b) the identity of the admin/ entity  and type of entity etc.  and (c) value in US$ of the account. Since you do not own an interest in the entity itself, line 35 is not appropriate. Line 36 ( trying to cover a broad set of circumstances ) is also somewhat confusing.  Therefore  my general pref. ( despite  8938 instructions to the contrary) of using " custodial account" as type -- this is especially true when you have something similar to "self-directed  IRA account".   Recogniton of the  foreign account is more important than exact type of account or entity -- IMHO.  Have not come across any case law on this specific issue esp. when the holding entity is immune from reporting requirements.

Is there more I can do for you ?