Liberty and justice for all United States persons abroad

The Isaac Brock Society

Tag Archives: non-U.S. retirement plans

FATCA rules on non-U.S. retirement plans encourage national origin discrimination in employment

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McDermott Will & Emory has a summary of the provisions for non-U.S. retirement plans in the allegedly-final FATCA regulations. While the regulations for banks provide incomplete protection for U.S. persons abroad by forbidding only “local FFIs” and not other categories of FFIs from discriminating against us, the regulations applying to retirement plans are even worse.

Narrow Participation Retirement Plans. A non-U.S. retirement plan established to provide retirement, disability and/or death benefits for its current or former employees and designated beneficiaries will be exempt from FATCA if these qualifications are met:

  • The plan has fewer than 50 participants.
  • The plan is sponsored by one or more employers that are not investment entities or passive non-financial foreign entities.
  • The plan is subject to government regulation and provides annual information reporting about its beneficiaries to the relevant tax authorities in its home country.
  • Participants not resident in the plan’s home country are not entitled to more than 20 percent of the plan’s assets.
  • Employee and employer contributions to the plan (other than transfers from certain retirement savings accounts or other exempt retirement plans) are limited by reference to earned income and compensation, respectively.

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National Law Review article includes Canada in list of forthcoming FATCA IGA’s

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The National Law Review has just posted a new article by three partners and associates of McDermott Will and Emery, based in Boston and Chicago. It details FATCA obligations and repercussions for multinational employers, focussing on non-U.S. retirement plans:

What You Need to Know About Foreign Account Tax Compliance Act’s (FATCA) Impact on Non-U.S. Retirement Plans

Beside the usual canard that “An intergovernmental approach to FATCA solves these compliance issues, significantly reduces FFI costs and simplifies tax administration”, there was this statement on the status of IGA’s worldwide:

“As of March 15, 2013, Denmark, Germany, Ireland, Italy, Mexico, Norway, Spain, Switzerland and the United Kingdom have initialed or signed IGAs with the United States.  It is likely that other countries will adopt IGAs, as the Treasury is engaged with more than 50 countries and jurisdictions to implement the reporting and withholding provisions of FATCA.  It is anticipated that IGAs will be entered into with the following countries in the coming months: Canada, Finland, France, Guernsey, Isle of Man, Japan, Jersey and the Netherlands.”

I cannot speculate on the authors’ information sources, but here’s just one more sign pointing towards a Canadian IGA in the not-too-distant future. As Arrow has previously suggested, we Canadians may very well be thrown under the next omnibus bill the feds roll-out.