Do You Need to Report Your Foreign Pension Under FATCA?
Most foreign pensions require FATCA reporting on Form 8938 if you exceed the filing thresholds, but here’s the relief you need: FATCA requires certain U.S. taxpayers who hold foreign financial assets with an aggregate value of more than the reporting threshold (at least $50,000) to report information about those assets, yet the foreign equivalent of Social Security, social insurance benefits or another similar program of a foreign government are not reportable.
Whether you’re contributing to a company pension plan in London or have vested benefits from a Swiss retirement account, knowing FATCA requirements helps you stay compliant without the stress.
Which Foreign Pensions Must Be Reported Under FATCA?
Foreign pensions fall into different categories, and not all require FATCA reporting. Form 8938 specifically requires reporting foreign pensions, but there are essential exemptions.
Reportable Foreign Pensions Include:
- Employer-sponsored pension plans with segregated accounts
- Individual retirement accounts (like Canadian RRSPs)
- Private pension plans you purchased abroad
- Defined contribution plans, where you can track account values
- Swiss third-pillar retirement accounts
- Australian Superannuation funds
Not Reportable Under FATCA:
- Foreign equivalents of Social Security
- Government welfare programs for old age/disability
- Traditional defined benefit pensions, where you can’t determine the current value
- Foreign pensions held through U.S.-based financial institutions
Even if you haven’t contributed to a foreign pension in years, you still need to report it if the value exceeds your threshold and you have an ongoing beneficial interest.
What Are the FATCA Filing Thresholds for 2025?
Your filing threshold depends on where you live and your filing status. The reporting threshold is higher for certain individuals, including married taxpayers filing a joint annual income tax return and certain taxpayers living in a foreign country.
If You Live Outside the United States:
Single or Married Filing Separately:
- $200,000 on the last day of the tax year, OR
- $300,000 at any time during the year
Married Filing Jointly:
- $400,000 on the last day of the tax year, OR
- $600,000 at any time during the year
If You Live in the United States:
Single or Married Filing Separately:
- $50,000 on the last day of the tax year, OR
- $75,000 at any time during the year
Married Filing Jointly:
- $100,000 on the last day of the tax year, OR
- $150,000 at any time during the year
Currency fluctuations can push you over the threshold unexpectedly. Many of our clients are surprised to discover they need to file Form 8938 when the dollar weakens against their local currency.
How Do I Value My Foreign Pension for FATCA?
Determining the value of your foreign pension can be straightforward or complex, depending on the type of plan you have.
- For Pension Accounts with Regular Statements: Use the account balance shown on periodic statements unless you have reason to believe they don’t reflect reasonable value estimates.
- For Defined Benefit Plans: If you don’t know the fair market value of your beneficial interest and received no distributions during the tax year, you can report the maximum value as zero. You still must report the plan on Form 8938, but indicate the maximum value as zero.
- For Plans Without Clear Values: You can use reasonable estimates based on publicly available information. You don’t need to hire an appraiser to determine value.
Do I Need to File Both FATCA and FBAR for My Foreign Pension?
Many expats get confused about whether they need to file both FATCA Form 8938 and the FBAR for the same foreign pension. The answer is often yes, but the requirements differ.
FBAR Requirements for Foreign Pensions:
Canadian Registered Retirement Savings Plan (RRSP), Canadian Tax-Free Savings Account (TFSA), Mexican individual retirement accounts, and Mexican pension funds are foreign financial accounts reportable on the FBAR.
Key Differences:
- FBAR reports foreign financial accounts
- Form 8938 reports foreign financial assets (broader category)
- You may need to file both for the same pension account
- Penalties are separate for each form
Some foreign pensions that aren’t reportable on FBAR (like employer defined benefit plans without segregated accounts) may still be reportable on Form 8938.
What If I Haven’t Been Filing FATCA Reports?
FATCA penalties are severe but manageable if appropriately addressed:
- Initial penalty: $10,000 per year for failure to file Form 8938
- Continuing penalty: Additional $10,000 for every 30-day period after IRS notification (maximum $50,000)
- Underpayment penalty: 40% penalty on tax deficiencies related to unreported foreign assets
The good news: The IRS offers correction programs, especially if your non-compliance wasn’t willful. Through Streamlined Filing Procedures and amended returns, you may be able to get back on track penalty-free.
How Can I Get Back Into Compliance?
If you discover you should have been filing Form 8938 for your foreign pension, don’t panic. The IRS has programs designed to help non-willful taxpayers get compliant:
Streamlined Filing Compliance Procedures:
- Available for taxpayers whose non-compliance wasn’t willful
- Requires three years of amended returns and six years of FBARs
- 5% penalty on the highest account balances (0% if living abroad)
Delinquent FBAR Procedures:
- For taxpayers who are current on tax returns but missing FBARs
- Often results in no penalties for non-willful violations
Many of our CPAs and Enrolled Agents are expats themselves, living in 14 time zones, and they know firsthand the challenges of managing foreign pension reporting requirements. We’ve helped thousands of clients resolve late filing situations with minimal penalties.
Real-World Examples
Corporate Expat with UK Company Pension
Sarah works for a multinational corporation in London and participates in the company pension scheme. The plan has a segregated account showing £85,000 ($106,250 USD equivalent).
- FATCA Requirement: Since Sarah lives abroad and files single, her threshold is $200,000/$300,000. She’s below the threshold, so no Form 8938 required.
- FBAR Requirement: Her pension account exceeds the $10,000 FBAR threshold, so she must file FinCEN Form 114.
Entrepreneur with Multiple Foreign Pensions
Marcus moved between Germany, Singapore, and Canada for work before settling in the U.S. He has pension accounts in all three countries totaling $180,000.
- FATCA Requirement: Living in the U.S. with $180,000 in foreign assets (above the $50,000/$75,000 threshold), Marcus must file Form 8938.
- FBAR Requirement: All three accounts are reportable on FBAR since they’re foreign financial accounts above $10,000 aggregate.
Your Next Steps
- If you’re current with filing: Review your foreign pension accounts against the thresholds above. Include all foreign pensions when calculating your total foreign asset value.
- If you think you missed required filings: Don’t file forward without exploring your options. The wrong approach could trigger unnecessary penalties or IRS scrutiny.
- If you’re planning to move abroad: Consider how new foreign pension contributions might affect your FATCA obligations before you relocate.
No matter how late, messy, or complex your foreign pension reporting may be, we can help. You’ll have peace of mind knowing that your taxes were done right.
Have questions about FATCA reporting for your specific foreign pension situation? If you’re ready to be matched with a Greenback accountant, click the get started button below. For general questions on expat taxes or working with Greenback, contact our Customer Champions.
Whether you’re years behind or just unsure about the thresholds, our team is ready to help.
This article is for informational purposes only and should not be considered legal or tax advice. Tax laws are complex and change frequently. Always consult with a qualified tax professional about your specific situation.
