# Unreported assets on 8938, FBAR



## apple nvm (Oct 10, 2021)

Hi,
My wife found recently she has corporate pension plans in her home country. No income from the pensions in past since she has not reach retirement age.
Except this pension plans, we have been reported all assets in Fbar and 8938.

we are now discussing if we should 1) report the pension plans from next year or 2) amend 8938 and Fbar for past year too.

our most concern is audit risk. Amend may get more IRS attention. We just wonder if anybody amend 8938 and Fbar.


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## Bevdeforges (Nov 16, 2007)

Pension plans are very often specifically excluded from reporting - it can depend a bit on the tax treaty involved, but if you're not drawing any income from the funds, you would probably not be "subject to an audit" based on not having reported them. To be honest, there are some very real doubts about exactly what the IRS uses the information from the FBAR and 8938 forms for, other than filing away for possible later use.


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## apple nvm (Oct 10, 2021)

Bevdeforges said:


> Pension plans are very often specifically excluded from reporting - it can depend a bit on the tax treaty involved, but if you're not drawing any income from the funds, you would probably not be "subject to an audit" based on not having reported them. To be honest, there are some very real doubts about exactly what the IRS uses the information from the FBAR and 8938 forms for, other than filing away for possible later use.


Thank you.
We talked with several CPAs, they said we need to report it in 8938 and Fbar. So, we will include it from next year surely. Since we do not know the cash value, and she has not received the distribution, we will report it with zero cash value or max value is unknown. 
But reporting it from next year means, this pension plan appear suddenly. Didn’t irs feel strange? Better to amend past years 8938 and Fbar? But we feel amending may get irs attention… we did not hide any income in her home country though.


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## Bevdeforges (Nov 16, 2007)

Don't bother to amend those back filings. And frankly, if you don't have any information on the cash value, then chances are it is the type of pension plan that is specifically NOT reportable. If it is any sort of government mandated pension plan then it is NOT reportable. (This is the type of pension plan you must pay into if you work in certain countries.) The other type of pension plan that is NOT reportable is a "defined benefit" plan - i.e. where you won't know how much you will be getting each month until you reach retirement age and your payment is calculated based on years worked and salary paid.

I don't know why the several CPAs you talked to insisted that it should be reported. Perhaps they didn't understand what sort of pension plan it is and figured better be safe than sorry. However, you should be perfectly OK to just start reporting it next time you file your taxes. There is virtually no evidence that the IRS bothers comparing what you reported previously to what you report for the current year - certainly not for your assets or FBARs. If it makes you feel any better, I am also a CPA - but have not practiced as one for many years. I never bothered to report my French or German retirement plans (all government mandated as part of the social security system) because they were "defined benefit" plans (as opposed to a "defined contribution" plan such as the US IRA, 401K and similar plans).


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## apple nvm (Oct 10, 2021)

Thank you for advise. 

I think her corporate pension is defined benefit pension plans. As the government pension scheme, she had to participate the corporate pension plan if company has, no choice. The employer contributed 50% and employee contributed 50% (actually mandatory withholding from her salary.) She did not have option to add any additional voluntary contribution. The company establishes fund or trust and they manage the investment. She can not direct any investment. She have "estimated" annual payment $ on their notification statement when she left company. One plan statement even says $ may be changed based on government pension rule. Beside this notification statement, she has not received any periodic statement. So, she called the company but she could not get the current cash value. They said this is pension plan which they promise to pay some $ at the retirement age, no cash value. Once she reaches the retirement age, she can receive the distribution or she can receive the lump sum payment if emergency case happens at retirement age. Before the retirement age, she can not withdraw money even in emergency case. If she dies before retirement age, the beneficiary can receive lump sum payment but the value is unknow because company will not calculate it while she is alive... 

CPAs says we should report because IRS instruction is unclear in this area. So, yes, their thought is "to be safe". They say to report it at least from next year. 
But amending... If this is reportable asset clearly eg 10k in bank account, we would amend. But pension? Really need to report? This is my thinking. Her concern to report it from next year comes from that pension will be reported in another line in part 2 and 6 in 8938 not same line as bank account, it is obviously different from past year. In past, no asset reported in part 2 and part 5, so she feel amending is better. But zero cash value though. 

If you do not mind, could you teach us why some "defined benefit pension plans" is considered not reportable assets or not her assets? When we read 8938, they are explaining how to find the value of defined benefit pension plan. So, we feel the defined benefit pension plan need to be report even she can not control anything. Due to lack of our knowledge and experience, we could not find by ourselves any IRS info says some of defined benefit pension plan are not reportable assets.


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## Bevdeforges (Nov 16, 2007)

If you have no right to an asset balance, but only to a benefit amount when you reach retirement, you have no asset. The form 8938 is for reporting assets. 

But from the instructions for the 8938 form:
*



Foreign Social Security

Click to expand...

*


> An interest in a social security, social insurance, or other similar program of a foreign government is not a specified foreign financial asset.


If this was a mandatory program which is part of the country's social security system, it is not a financial asset.


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## apple nvm (Oct 10, 2021)

Hi Bevdeforges, 

Thanks! She talked with one more CPA. The CPA says if she can not access the balance, no need to report it. If we have concerns, just report it from next year with zero cash value. So, we will do from next year. 

Then, we are now "practicing" to fill in 8938 for next year before we forget what we learned this time. Part 6, question 7-c, we have no idea which one we should choose since we are not a tax expert, we are not exactly sure the definition of words in tax area. Pension fund hold her pension plans. Is it corporate or trust or ? How can we find the answer?


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## Moulard (Feb 3, 2017)

A trust is a fiduciary relationship in which one party holds title to an asset and manages it for the benefit of another party.

Therefore a pension plan is always going to be a trust.


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