Is a pension held in a foreign country a foreign financial asset (form 8938, $50k Reporting threshold) or a financial account (FBAR, $10k Reporting)

[Rich-Scott]

I'm a permanent resident and the pension fund was built up while I was working in the UK.

[Fern]

A foreign pension is reported on Form 8938 where the threshold is $50,000.

The IRS FAQ on this subject states “If you have an interest in a foreign pension or deferred compensation plan, you have to report this interest on Form 8938 if the value of your specified foreign financial assets is greater than the reporting threshold that applies to you.”

See https://www.irs.gov/Businesses/Corporations/Basic-Questions-and-Answers-on-Form-8938#FPensionsQ1

[Thomas30]

Does it matter if it is a government held account or not?

The 8938 instructions contains the following statement:

"Foreign social security. An interest in a social security, social insurance, or other similar program of a foreign government is not a specified foreign financial asset."

Would it be correct to assume that a government pension plan counts as a social security?

[DavidD66]

Form 8938 requirements would not apply to a UK pension plan.  

[AngelaAB]

I have an interest in a defined benefit pension with BP plc in the UK.  I am now a US citizen, is it correct that I do not need to report it in Form 8938? If so, why not?  thank You!

[SusanY1]

In many cases, defined benefit pension plans are not considered to be your personal asset because you do not have unrestricted access to the plans.  In other words, they generally do not have a value that is accessible to you and in most cases the plan participant (you) are not considered to be the owner of the asset - the company owns the asset and you are simply the beneficiary of a promised benefit.

However, there is no tax associated with reporting assets on Form 8938 and the exact details of each plan can vary greatly.  A nuance in an individual plan could mean that plan does meet the requirements to report, and the penalty for not reporting when it is required can be stiff. 

Therefore, unless you are certain that your plan is exempt from individual  reporting requirements it is generally recommended  to err on the side of caution and report the asset.

The form is fairly simple and reporting the asset does not impact your tax.

[AngelaAB]

Thank you Susan for prompt response. So I will file the Form 8938 just on the safe side. 

For my interest in this BP defined benefit pension, do you think I also need to report it in Form 3520(Foreign Trust) and Form 3520-A as a beneficiary to this Defined Benefit pension fund?

[AngelaAB]

Hi Susan,

Since my 2019 tax return already accepted by IRS and this interest in a UK defined benefit pension is not a personal asset, is it okay not to amend the 2019 tax return to include a zero value foreign asset on form 8938?

 However, I'll make sure I will include the form 8938( and Form 3520 if you think I also need) in my 2020 tax return.

Thank you!

[Aver]

What would be the value of this foreign Defined benefit plan. As we can find out what we will get on a yearly basis once we retire, but I don't know what the value is. I saw at CPAjournal.com to list 0 value, as it is unknown. So that would mean that we don't have to count it towards the threshold of 50K /100K, correct?

[ReneeM7122]

No, although the value is considered $0 because you don't know the value until you begin to take withdrawals upon retirement, you still have to report a foreign defined benefit plan on form 8938 if the total aggregate balance of foreign accounts reaches $10,000 during the year.  You should use a currency calculator to get the USD amount.   

@Aver