There are 4 sections of IRS code that need to be considered in regards to non-qualified deferred compensation plans and a U.S. tax lawyer who is without prior research on IRC 402b foreign retirement plans will bill between $125,000.00 and $200,000.00 prior to doing research on foreign country pension laws. The reason that specialist Tax Attorneys are necessary is that Internal Revenue Codes can not be read front to back like a Novel. Additionally unless a Tax Attorney is a specialist in this sector they would not accept the liability for being correct.
[box]Most Tax Attorneys do not understand this style 402b. Our comment to them is that if you do not know about this 402b program, nor have experience, then tell us now and we will fix that. Don’t confuse your client by stringing them along by giving advice that effectively says we don’t know about this and therefore it will not work.[/box]
Therefore, after US Tax compliance the next requirement is a tax attorney with knowledge about international pension law in both common and civil law jurisdictions. Preferred is a tax attorney who has deep and broad experience in the administration of pensions in the foreign jurisdiction that you are considering. Experience gives definition to the laws which is not possible to understand from straightforward reading of the law.
[box type=”info”]Knowledge about the outcome of court cases that have challenged retirement plans secrecy and privacy is imperative. As example: law in Hong Kong has been challenged by both worldwide asset freezing orders and by the U.S. Internal Revenue Service. All challenges have failed because the law in Hong Kong is recognized law in US retirement plan law and tax law.[/box]
None of the big 4 accounting firms in their FATCA technical guide cover FATCA and IRS recognized international retirement plans nor provide content or information about the ”limited conditional” category in IRS Form 8957. You will find nothing in those guides regarding W-8BEN-E box 29e compliance. You will find nothing in those guide regarding IRS Form 3520 exemption from filing a foreign gift or trust. You will find nothing that explains the difference between a savings account with a retirement plan label on it and a government regulated, registered and recognized retirement plan. You will find noting about exclusion from passive foreign investment rules. Knowing the recognized difference of this exempt category is crucial to regulatory reporting and tax planning.
Leave a Reply