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Foreign Retirement Plan: PFIC Form 8621, Form 8938 and FBAR/FinCen 114

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last updated ‎April 07, 2020 1:23 AM

TP living abroad worked for a foreign company and participated in the company retirement plan. This foreign retirement plan only invests in various US ETFs.

It is my understanding that it is the foreign account not the foreign retirement plan itself that triggers the obligation to file PFIC Form 8621, Form 8938 and FBAR/FinCen 114 reporting (TP met both Form 8938 and FinCen 114 reporting thresholds).


Therefore, TP does not have to file PFIC Form 8621, Form 8938 and FBAR/FinCen 114. Is this correct?

Thank in advance for your time and comment.

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Level 15
last updated ‎April 07, 2020 1:23 AM

Your understanding is not correct.  See §1297 for definition of PFIC, which refers to the foreign corporation and the kind of income/asset it has, not whether it invests in US or foreign securities.

Investing in ETF's or other mutual funds whether through an investment account or foreign pension plan can trigger PFIC tax and/or reporting requirements but there are exceptions.  Part of this has to do with the type of pension and trust it is as well as whether treaty protection is available.

It is also not correct that none of that is reportable for FBAR and FATCA.

Penalties for getting these wrong are substantial.  You need to tread carefully here.

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Still an AllStar

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Level 15
last updated ‎April 07, 2020 1:23 AM

Your understanding is not correct.  See §1297 for definition of PFIC, which refers to the foreign corporation and the kind of income/asset it has, not whether it invests in US or foreign securities.

Investing in ETF's or other mutual funds whether through an investment account or foreign pension plan can trigger PFIC tax and/or reporting requirements but there are exceptions.  Part of this has to do with the type of pension and trust it is as well as whether treaty protection is available.

It is also not correct that none of that is reportable for FBAR and FATCA.

Penalties for getting these wrong are substantial.  You need to tread carefully here.

---------------------------------------------------------------------------------
Still an AllStar

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Highlighted
last updated ‎April 07, 2020 1:23 AM

@itonewbie many thanks for the pointer and your time.  I will do more research.

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