Is the non-U.S. retirement/pension plan a mandatory government plan?
There is likely informational reporting on US FinCEN Form 114 and Form 8938, depending on thresholds, for the individual
plan participant.
STOP – there should
be no U.S. reporting necessary.
In addition to the informational reporting requirements on US FinCEN 114 and Form 8938, potential taxation of “pre-tax” employee contributions, employer match and growth
in the plan account may occur throughout the period of the plan participant’s residency in the U.S.
YES
NO
NO
YES
Does the plan originate in a treaty country with a reciprocal pension article providing tax deferral?
In addition, foreign trust reporting
on Form 3520 and/or PFIC taxation computed on Form 8621 may be looming.
Later, when the employee retires in his/her home country and must pay tax
on distributions from the plan, there will likely be no U.S. tax credits available from the tax he/she previously paid on the income accumulation in the plan to offset his/her home country tax, and double taxation will occur due to the timing mismatch!
In addition, foreign trust reporting
on Form 3520 and/or PFIC taxation computed on Form 8621 may be looming.