Do Foreign Pensions Trigger FBAR and Form 8938 Reporting Requirements?

2025-08-12 14:40:22

Many foreign pensions are reportable to the IRS. Find out which retirement accounts trigger FBAR and Form 8938 and how to stay compliant.

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If you're a U.S. taxpayer with a pension abroad — whether it's a UK SIPP, a Canadian RRSP, or a Swiss Pillar 3a — you may have an unexpected IRS filing obligation. Even if you’re living overseas and paying taxes locally, the U.S. requires you to report many foreign retirement accounts. Two forms often come into play: the FBAR (FinCEN Form 114) and Form 8938 (Statement of Specified Foreign Financial Assets). Not reporting the right account can lead to stiff penalties.

Let’s break down which foreign pensions trigger these requirements, what each form requires, and how to stay compliant.

What Is the FBAR?

The FBAR is required when you have a financial interest in or signature authority over foreign financial accounts totaling over $10,000 at any point during the year. These accounts include bank accounts, investment accounts, and many retirement accounts held outside the U.S.

Even if the account earns no income, if it meets the threshold, it needs to be reported.

What Is Form 8938?

Form 8938 is part of the IRS’s FATCA compliance regime. It applies to specified foreign financial assets if the total value exceeds a certain threshold. For example:

• Single U.S. filers living abroad: $200,000 on the last day of the year or $300,000 at any time.
  
  

• Married filers abroad: $400,000 on the last day of the year or $600,000 at any time.
  
  

This form is filed with your federal tax return, unlike the FBAR, which is filed separately through FinCEN’s BSA e-filing system.

Are Foreign Pensions Reportable?

In most cases, yes.

Many foreign retirement accounts qualify as foreign financial accounts and are therefore subject to FBAR reporting. They may also qualify as specified foreign financial assets, requiring disclosure on Form 8938. However, the type of pension matters:

Examples of Reportable Foreign Pensions

RRSP exception: The IRS exempts RRSPs from Form 8938 if properly elected under the U.S.-Canada tax treaty using Form 8891 (for years prior to 2015) or under current rules.

What About Employer-Sponsored Pensions?

If you’re participating in a foreign employer’s pension plan, reporting can be trickier. In some cases, if the account is held in your name and you can access or direct the funds, you may need to report it.

Examples:

• Foreign 401(k)-style accounts
  
  

• Government pensions (less likely to be reportable)
  
  

• Foreign stock or profit-sharing plans
  
  

The FBAR focuses on control and financial interest, not just ownership. So if you can withdraw or make decisions about the account, report it.

What Happens If You Don’t Report a Foreign Pension?

Failing to report a foreign pension that meets FBAR or Form 8938 thresholds can trigger penalties — even if the account earned no income.

FBAR Penalties:

• Non-willful: Up to $10,000 per year
  
  

• Willful: Up to $100,000 or 50% of the account balance (whichever is greater) per year
  
  

Form 8938 Penalties:

• $10,000 for failure to file
  
  

• Up to $50,000 for continued noncompliance
  
  

• Possible 40% penalty on underreported income
  
  

IRS and FinCEN Don’t Share the Same Rules

Just because a foreign account isn’t taxed in the U.S. (yet), doesn’t mean it’s not reportable.

The IRS handles Form 8938.
FinCEN (Financial Crimes Enforcement Network) manages the FBAR.

They are separate systems, but both share data. Failing to file one while filing the other may draw attention.

How to Stay Compliant

1. Know Your Pension Type
   Understand what kind of account you have and whether it meets FBAR/Form 8938 thresholds.
   
   

2. Track Account Balances Year-Round
   A brief spike in value (even for a day) could trigger reporting.
   
   

3. File Electronically and On Time
   
   

• FBAR: Due April 15, with automatic extension to October 15
  
  

• Form 8938: Filed with your tax return
  
  

4. Work With an Expat Tax Pro
   A qualified accountant who understands international tax law can guide you through gray areas and treaty provisions.
   
   

Bottom Line

Foreign pensions are not “invisible” to the IRS. If you’re a U.S. person living abroad, chances are your retirement savings will require some level of U.S. disclosure. The safest approach? Assume the account is reportable unless a tax advisor says otherwise.

The FBAR and Form 8938 are compliance tools, not tax bills — but the penalties for skipping them can be steep. When in doubt, disclose.

M.Daniyal