Overseas pension plans on the up 19 May 2014New York Reporter: Tammy Facey
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The number of American expats setting up overseas pension plans in the run up to the implementation of the Foreign Account Tax Compliant Act (FATCA) has risen, according to deVere Group.
deVere polled 361 of its overseas-based clients, with 78 percent saying they have created a tax-qualifying FATCA-compliant pension plan to manage requirements.
From 1 July 2014, foreign financial institutions will be required under FATCA to report information regarding US persons living both in the US and abroad, to the Internal Revenue Service.
To combat this, deVere has found that the use of overseas pension plans is on the rise.
Nigel Green, founder and chief executive of deVere Group, said: “It is extremely encouraging that the overwhelming majority of those we polled who have taken out an additional overseas pension contract to mitigate FATCA's complicated, costly and privacy-infringing demands.”
Those with assets worth over $50,000 will have to meet the requirements of FATCA, which are designed to encourage compliance and uncover assets held overseas.
In contrast to deVere’s findings, the US Treasury Department has found that Americans have avoided FATCA by giving up their green cards and passports.
As reported in the Federal Register, 1001 Americans gave up their passports or green cards in Q1 2014.
Surveyed deVere clients said they were “satisfied with the action taken and that 'they would no longer consider giving up US citizenship'."
Expats are recommended to take advantage of the passive foreign investment companies because they will avoid incurring tax penalties under FATCA.
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