Failed to report deferred pension to IRS

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panek
Posts: 55
Joined: Mon Jan 07, 2013 7:44 pm

Failed to report deferred pension to IRS

Post by panek »

I am a resident alien (Canadian citizen) working on a TN visa. I have correctly reported my FBAR and 8891 for the past few years but completely forgot about my foreign deferred pension. I am now wondering whether I need to back-file form 8938.

The requirements per the IRS state that if you don't know the fair market value of your beneficial interest in the plan at the end of the tax year based on readily accessible information, and if you aren't receiving distributions, then the value of your deferred pension is 0 for the purposes of 8938.

Up until now I did not know the fair market value of my beneficial interest in the plan. I called my plan custodian today and learned that the commuted value is around $41,000 but that was from the date I terminated the plan (2 years ago). I'm not sure if it's even possible for me to find out the fair market value of the plan on the last day of the year (to find out the updated commuted value I have to establish a new termination decision). What qualifies as "readily accessible information"?

I have a Canadian RRSP worth $15,000 which means that I am potentially over the $50,000 required to file 8938 but I'm not sure how to make that determination. If the information is not readily accessible then the value of the plan is 0 for the purposes of 8938 and I wouldn't need to file.

To summarize:

I have a deferred pension in Canada but do not receive distributions
I am not sure how to determine the fair market value of the plan on the last day of the year (I receive no updated statements etc.)
I have not filed 8938 for the last 2 years (2012 and 2013 returns) because I did not think I met the threshold
I have a Canadian RRSP valued at $15,000 and no other foreign assets

The commuted value of my pension dated from when I left the plan in mid-2013 was $41,000 which I learned today (I will receive an
updated commuted value in 1 month)

I am considering rolling the deferred pension into a LIRA in 2015 that will then require me to file 8938 (I will be above the threshold).

My questions:

1. Do I need to file a delinquent 8938? If so, how?

2. Do I need to backfile my pension information on the FBAR? I can't seem to find a straight answer. Some sources say that foreign pensions do not need to be reported on the FBAR and some say that they do.

3. Do I need to file anything else in relation to the pension?

Any help is greatly appreciated!
nelsona
Posts: 18314
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Post by nelsona »

2. Foreign pensions which are not in an account which you have control over are not included in FBAR.
3, No.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
panek
Posts: 55
Joined: Mon Jan 07, 2013 7:44 pm

Post by panek »

Thanks as always nelson.

Any insights about my first question? Whether I need to backfile 8938?
nelsona
Posts: 18314
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Post by nelsona »

Look back at the rules in place 8938 for the years in question. If you meet the threshold for those years then 'yes', you should file 8938.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
panek
Posts: 55
Joined: Mon Jan 07, 2013 7:44 pm

Post by panek »

Hi Nelson,

I have looked them up and the rules are confusing since they rely on a subjective definition of "readily accessible information". What qualifies as readily accessible information? How do I establish the fair market value of the pension at the end of the year (is that the "commuted value?") when I receive? If I don't know then I set the value to 0 and I wouldn't have to file. If I do know, then I have to file. Any thoughts are greatly appreciated. I have contacted the plan custodian and they couldn't tell me so I guess I'll operate on the assumption that it's worth 0 and that I don't meet the threshold unless you think otherwise.

Appreciate your help as always ;)


http://www.irs.gov/Businesses/Corporati ... m-8938#Q12

In general, the value of your interest in the foreign pension plan or deferred compensation plan is the fair market value of your beneficial interest in the plan on the last day of the year. However, if you do not know or have reason to know based on readily accessible information the fair market value of your beneficial interest in the pension or deferred compensation plan on the last day of the year, the maximum value is the value of the cash and/or other property distributed to you during the year. This same value is used in determining whether you have met your reporting threshold.

If you do not know or have reason to know based on readily accessible information the fair market value of your beneficial interest in the pension plan or deferred compensation plan on the last day of the year and you did not receive any distributions from the plan, the value of your interest in the plan is zero. In this circumstance, you should also use a value of zero for the plan in determining whether you have met your reporting threshold. If you have met the reporting threshold and are required to file Form 8938, you should report the plan and indicate that its maximum is zero.
nelsona
Posts: 18314
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Post by nelsona »

It's your decision. Since you seem to be able to retrieve the value by asking for it, at least with a lead time, from the trustee, I would say that is "readily" available.

But that is just my opinion. Therea re a couple of others 'round here that are more familiar with 8938 concerns.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
panek
Posts: 55
Joined: Mon Jan 07, 2013 7:44 pm

Post by panek »

Thanks for the insights.

Just in case others read this thread: unfortunately it's not easy as in order to find the commuted value I have to elect for a termination decision, meaning that I have instigate a process that will leave me with 30 days to decide (and a bunch of paper work) whether to rollover the commuted value into a LIRA or similar account or whether to continue with the deferred pension. There is also no way of finding the value on the last day of the year which the IRS requires. The commuted value will be calculated at some period of time over the 30 days after requesting a termination decision and I have no control over the exact day when that happens. In my mind that's not readily accessible so I'm not going to worry about it but appreciate your thoughts!

Many thanks again
nelsona
Posts: 18314
Joined: Wed Oct 27, 2004 2:33 pm
Location: Nowhere, man

Post by nelsona »

Too bad. My pension has a calc I can access.
But like you say, no worry if you can;'t do it easily.
nelsona non grata. Non pro. Please Search previous posts, no situation is unique as you might think. Happy Browsing :D
AidenTorres
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Re: Failed to report deferred pension to IRS

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