• Daniel Gray CPA Toronto

FBAR Reporting Requirement or Exception - 4 types of foreign retirement accounts

Foreign retirement accounts do not meet the FBAR filing exception for U.S. retirement accounts in 31 CFR 1010.350(g)(4). That exception specifically applies to plans under sections of the Internal Revenue Code, that is, domestic U.S. plans.

FBAR reporting of foreign retirement accounts will be determined by the facts of each situation. However, these general guidelines may be helpful in determining whether your foreign retirement account should be reported on the FBAR.

Foreign retirement account maintained by an individual. If an individual maintains a foreign retirement account separate from his or her employer (similar to an IRA account under section 408), the individual is the owner of the account and thus has a “financial interest” in the account as described in 31 CFR 1010.350(e)(1). An individual who is a U.S. person must file an FBAR report with respect to a foreign IRA-type retirement account if the reporting threshold is exceeded. (Example = Canadian RRSP)

Foreign defined contribution plan. A foreign defined contribution plan normally is an employer plan that covers multiple employees. An individual participant in the plan is not the “owner of record” and does not have “legal title,” nor do most participants own >50% of the plan. However, most defined contribution plans allow individual participants to direct the investment of contributions made to the employee plan trust on his or her behalf. In this case, an individual participant has a “financial interest” with respect to a foreign financial account maintained by the employer plan trust because the trustee is acting as an “agent” on behalf of the individual participant as described in 31 CFR 1010.350(e)(2)(i). Such a plan is reportable on the FBAR.

Foreign defined benefit plan. A foreign defined benefit plan normally is an employer or governmental plan that covers multiple individuals and provides for a benefit that is fixed under the terms of the plan. Plan participants are not the “owner of record,” nor do they have legal title; they generally do not own >50% of the plan; and normally they cannot direct investment of plan funds. They usually do not have “signature authority” as they cannot cause a disposition of funds from the account. So generally, individuals do not have an FBAR reporting requirement when these factors are present. An exception would be a plan held in a trust for a small number of individuals, where one individual might have a greater than 50% interest in the plan trust. That interest would be reportable.

Annuities. If an individual annuity contract is provided for a recipient under any of the above plans, the annuity would generally be reportable on the FBAR.


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