Foreign Bank Account?

[veritas]

I don't see a reference in TTB for foreign bank account?

I have a client who is a US citizen/resident for 2005. Would the Australian equivalent of our social security be considered a foreign account/trust. They unlike us have actual accounts with money in it. I have seen the statements and the balance was over $10,000.

Secondly there is a question about an inheritance he received and in is in an account "in his sister's account in trust for him"?

He doesn't seem to know if he has signature or other authority over the account.

[veritas]

The account in Australia is called a Superannuation account.

[Koss]

Australian Social Security

Is your client vested in the "account"?

Can he withdraw funds?

If the answer is no, then I don't think it's a foreign bank account.

Turn the tables. Examine this question from the other direction, using exactly the same criteria. Suppose I am a citizen of Australia who has lived and worked in the US for many years. I somehow have to file an Australian tax return, and RDU (Revenue Down Under) wants to know: Do I have an account in another country?

Well, gee, what about my pension at General Motors?

If the balance is less than zero, is it still considered a pension?
When is a retirement plan a liability? When you work for GM or Enron.

Okay, just kidding.

In all seriousness, in the context you are describing, a 401(k) would definitely be considered a foreign bank account. Even when you are still working, you can withdraw the money prematurely. But if you can't touch it, and you have no control over it, and the program simply pays out benefits...

Our social security accounts have balances, too. They just aren't expressed in terms of present value. They are expressed in terms of income earned during your lifetime, and future potential benefits. You see what these balances are every year on your social security statement.

Lawyers call this a remote contingent interest. In theoretical terms it has the structure of a trust. The beneficiary is you. The trustee is... Uncle Sam.

But you're also a grantor to the trust, because you are making contributions to the tune of 7.65% of your income.

So maybe your client does have a foreign account. Isn't there something on that same page about being a "grantor to a foreign trust?"

It's getting too late for this...

Burton

[Gretel]

Burton, this is just great. You have such a good way to explain things and it's great of you to take the time - NOW - to do so.

I've tried giving some kind of response starting like: I really don't have any idea but....

Then decided, I don't have any idea and better shut up.

[veritas]

These accounts "RSA for retirement savings account" appear to be fully vested as contributions are made by the employer and the employee. Withdrawals are permitted at retirement age 55 and also for the following:

medical treatment for the member or his/her dependant where the treatment is necessary to treat a life threatening illness or injury, or to alleviate acute or chronic pain or acute or chronic mental disturbance, and where such treatment is not readily available through the public health system;
medical transport for the member or his/her dependant to access treatment necessary to treat a life threatening illness or injury, or to alleviate acute or chronic pain or acute or chronic mental disturbance;
modifications to the family home and/or vehicle to meet the special needs of a disabled member or his/her disabled dependant; or
palliative care or death, funeral, or burial expenses for a member or his/her dependant.
In addition, it is possible to have an amount released to a member to prevent foreclosure of a mortgage, or exercise of a power of sale over the member's principal place of residence.

From July 2002, temporary residents permanently departing Australia are able to receive payment of superannuation accumulated during their residency.

To be safe I think I will complete the form TD F 90-22.1

I would trade my social security in a minute for their system.

[Unregistered]

I would point out:

1. The foreign trust you describe is subject yo 3520 and/or 3520A reporting.
2. Employer contributions to super are reportable as foreign earned income when contributed.

[veritas]

unregistered

I see that would make more sense to treat as a trust. Have you done this reporting requirement specifically for the account I described?