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Benefits in the News > By Subject >

International, expatriate issues


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U.S. Tax Issues for U.S. Expats in U.K. Pension Schemes (PDF)
"[W]ith the rise of tax information sharing among country tax authorities, it is increasingly important to be aware of cross-border tax issues that may arise at the member level.... [T]he US income tax system taxes US citizens and green card holders and residents ... on their worldwide income.... [B]eing a member in a pension scheme, having options or other share rights, or even bonus arrangements, may be considered having a financial account ... For a US taxpayer to not properly treat or disclose such benefit for US tax purposes can lead to significant penalties, and for their employers, some reputational risk or embarrassment." (Groom Law Group)
Canadian Court Rejects Multiemployer Plan's ERISA Controlled-Group Liability Claims (PDF)
"The court held that ERISA cannot be applied to hold Canadian entities liable for multiemployer withdrawal liability simply because those entities are owned by a common parent.... The decision marks one of the few instances to date that a court has analyzed ERISA's reach across the U.S. border, and may make it more difficult for multiemployer plans and the PBGC to seek payment from foreign entities of liabilities associated with underfunded multiemployer and single employer plans." [Walter Energy Canada Holdings, Inc. (Re), 2017 BCSC 709, May 1, 2017] (Groom Law Group)
Rising Health Care Benefit Costs Show No Sign of Abating Globally
"[M]edical insurers globally are projecting the cost of health care benefits to rise 7.8% this year, an increase from 7.3% in 2016.... Latin America projects the largest increases, driven by very high rates of inflation in some countries. The Middle East and Africa region is also projecting large increases (9.8%). Europe continues to show the lowest level of increase. U.S. insurers project a 7.5% increase this year, slightly less than they experienced in 2016." (Willis Towers Watson)
International Pension Plan Survey 2016
"Key findings [include]: [International Pension Plans (IPPs) and International Savings Plans (ISPs)] are offered by companies in excess of 20 business sectors, with high prevalence in Banking and Finance, Oil and Gas, Industrials, and Engineering and Power. 59% have been established with a 'retirement objective' (IPPs), with 41% having more a shorter-term 'savings objective' (ISPs).... IPPs/ISPs are increasingly being used for local employees based in countries where there are serious economic difficulties by paternalistic sponsoring employers." (Willis Towers Watson)
[Opinion] IPEBLA Comment Letter to Treasury on FIRPTA Requirements for Exemption for Qualified Foreign Pension Funds (PDF)
"[It] ispossible that almost no pension fund, even one that meets U.S. ERISA requirements, could satisfy the [qualified foreign pension fund (QFPF)] exemption. That would not seem to be the intended result of the PATH Act change, which is to encourage non-U.S. tax-advantaged pension funds to invest in U.S real property. The issue is essentially what it means for a plan to 'provide annual information reporting about its beneficiaries to the relevant tax authorities'." (International Pension & Employee Benefits Lawyers Association [IPEBLA])
Foreign Pension Plan Considerations for U.S. Taxpayers
"Foreign pension plan participation is an issue for U.S. citizen employees who reside abroad and foreign nationals temporarily residing in the U.S.... A foreign pension plan may have higher contribution limits than those available under U.S. qualified plans, and certain pensions allow the [in-kind] contribution of shares and partnership interests. Contributions to a foreign pension plan could be made in addition to annual contributions to a U.S. qualified plan, and in some jurisdictions, are unlimited." (Dominion Fiduciary Services Limited)
OECD Advocates Use of Annuity Distributions for DC Plans
"The organization made the recommendation in its latest Pensions Outlook 2016 ... which focused in part on the increasing importance of defined contribution plans in OECD countries. The OECD also recommended that DC plans and design are simplified amid the growing importance of individual retirement arrangements." (Pensions & Investments)
EU Workplace Pensions Now Required to Incorporate ESG Issues
"The new pensions directive stipulates that: ESG criteria [are] to be considered in investment decisions and their practical implementation should be disclosed in regular reports.... The integration of ESG considerations will not be considered as conflicting with fund managers' fiduciary duties." (Latham & Watkins)
The United Kingdom's New Automatic Retirement Savings Program (PDF)
20 pages. "In 2001, the U.K. required all employers with five or more employees to offer pension plans to their employees, but employers were neither required to contribute to those plans nor were employees automatically enrolled in a plan. Going a step further, starting in October 2012, the U.K. launched a new retirement savings program that is designed to expand pension coverage while maintaining a minimum level of contributions.... This paper [provides] the first detailed analysis for an American audience ... on the progress of the U.K.'s retirement policy initiative[.]" (National Institute on Retirement Security [NIRS])
European Pension Regulation Revised, Further Encourages Cross-Border Pensions, Pushes Social Investing (PDF)
"In July, 2016, the European Commission issued the final text of a revised Institutions for Occupational Retirement Provision (IORP) ... It will not result in any immediate changes ... However, it is notable for its effort to nudge cross-border pensions a little further down the road by clarifying their manner of regulation, as well as some other items which have been included, such as social investing (environmental, social and governance, or 'ESG'), or specifically not included, such as EU-level funding rules." (Groom Law Group)
[Opinion] U.S. Chamber of Commerce Comment Letter to IRS on Expatriate Health Plans, Expected Benefits, and Limited Duration Insurance
"If finalized, these regulatory proposals would render an overly narrow and restrictive application of the flexibility that the EHCCA was designed to provide: the compliance deadline or effective date; the new regulatory definition of 'substantially all;' the new notice requirement for electronic furnishing of statements; the truncated term for short-term, limited duration insurance; and travel requirements for expatriates. The Chamber has discrete concerns regarding each of these sections and recommends substantive changes for these provisions in the Final Rule." (U.S. Chamber of Commerce)
[Opinion] ERIC Comment Letter to IRS on Proposed Regs for Expatriate Health Plans and Other Issues (PDF)
"Flexibility is needed to ensure expat plans can continue to be a viable option for employees.... Indemnity and disease-specific benefits improve the lives of employees, and flexibility must be maintained.... Short-term, limited duration plans serve an important niche, and the Departments must take a balanced approach in regulating them.... Effective date should be delayed as planning is already underway for the 2017 plan year." (The ERISA Industry Committee [ERIC])
[Guidance Overview] Proposed Regs Provide Permanent Relief for Expatriate Health Plans (PDF)
"Under ACA regulations, hours of service worked outside of the 50 U.S. states and the District of Columbia (i.e., where compensation for services constitutes income from sources outside of the U.S.) are not counted, regardless of the individual's residency or citizenship. This means that these employees likely will not have the requisite hours of service to be considered full-time employees and, therefore, would not have to be taken into account in determining whether an employer has offered coverage to substantially all of its full-time employees or in determining the amount of any assessment." (Xerox HR Services)
[Guidance Overview] IRS Proposed Rules on ACA and 2014 Expat Law Address Some But Not All Mysteries
"In order to be considered minimum essential coverage (MEC) ... individual coverage must either be obtained through a state exchange or must receive specific approval from HHS. Coverage provided directly by a foreign government and foreign individual insured coverage must also receive specific HHS approval.... To qualify under EHCAA, the expat plan must have an actuarial value of at least 60 percent (often referred to as minimum value under the ACA).... EHCAA allows the IRS tax forms (1095-B or 1095-C) to be supplied electronically to the enrollee (expat) without consent, unless the enrollee explicitly refuses electronic delivery." (Lockton)
Poland Dismantles Private Funds in Pension Revamp
"In Poland's biggest pension overhaul since 1999, the assets of the 139 billion zloty ($34.5 billion) industry will probably be transferred to individual retirement accounts, with at least a quarter of the holdings to be managed by a state entity ... The plan also assumes pension savings will get a boost from incentives offered to Poles to opt for long-term investment." (Pensions & Investments)
FTSE350 Pension Deficits Rocket to a Record 119 Billion GBP in Wake of Brexit
"At 30 June 2016, asset values were £694 billion (representing a rise of £31 billion compared to the corresponding figure of £663 billion at 31 May 2016), and liability values were £813 billion, representing an increase of £52 billion compared to the corresponding figure of £761 billion at the end of May." (Mercer)
[Guidance Overview] Agencies Propose ACA Regs on Expatriate Plans and Excepted Benefits
"If your plan includes a benefit intended to qualify as a fixed hospital or other fixed indemnity policy, review to ensure the reimbursements do not vary depending on type of service and are made on a per diem basis. If your company offers expatriate plans that are intended to constitute minimum essential coverage, check with your carrier that the plan meets minimum value and that the carrier is a qualified expatriate health insurance issuer. Confirm that substantially all of those covered under the expatriate plan are qualified expatriates." (Seyfarth Shaw LLP)
[Guidance Overview] Agencies Issue Proposed Regs on Expatriate Coverage, Excepted Benefits, Lifetime and Annual Limits, and Short-Term, Limited Duration Insurance (PDF)
"The Proposed Rule does not address whether the reasonable good faith rule will continue to apply. However, in the absence of language to the contrary, it seems that the reasonable good faith rule should continue to apply at least until the final rule is published.... The Proposed Rule does not state that expatriate health plan administrators are limited to entities within the United States.... [S]elf-funded plans administered by foreign entities that satisfy the requirements to be an expatriate health plan administrator could fall within the scope of the [Expatriate Health Coverage Clarification Act (EHCCA)] ... The Proposed Rule does not provide a format or content for demonstrations of creditable coverage." (Groom Law Group)
[Guidance Overview] Agencies Release Guidance on Application of ACA Rules to Expatriate Health Plans
"Substantially all of the benefits provided under an expatriate health plan must be benefits that are not excepted benefits. The proposed regulations consider group or individual supplemental health insurance benefits and travel insurance to be excepted benefits.... The proposed regulations add new requirements for hospital and other indemnity insurance to comply with in order to be considered an excepted benefit. For instance, enrollment materials provided to enrollees must indicate that the coverage is a supplement to major medical coverage and that a failure to have MEC may result in additional taxes." (The Wagner Law Group)
[Guidance Overview] Expatriate Health Plan Rules Address ACA Information Reporting, Code Section 162(m)(6), and More
"The proposed regulations address: [1] How information reporting rules under the [ACA] apply to expatriate health plans. [2] Standards for travel insurance and supplemental health insurance coverage to be considered excepted benefits ... [3] A notice requirement for hospital indemnity and other fixed indemnity insurance in the group health insurance market to be considered excepted benefits." (Practical Law Company)
[Official Guidance] Text of Agency Proposed Regs: Expatriate Health Plans, Expatriate Health Plan Issuers, and Qualified Expatriates; Excepted Benefits; Lifetime and Annual Limits; and Short-Term, Limited-Duration Insurance
117 pages. "This document contains proposed regulations on the rules for expatriate health plans, expatriate health plan issuers, and qualified expatriates ... [and] proposes standards for travel insurance and supplemental health insurance coverage to be considered excepted benefits and revisions to the definition of short-term, limited-duration insurance for purposes of the exclusion from the definition of individual health insurance coverage.... In addition, this document proposes to amend a reference in the final regulations relating to prohibitions on lifetime and annual dollar limits and proposes to require that a notice be provided in connection with hospital indemnity and other fixed indemnity insurance in the group health insurance market for it to be considered excepted benefits." (Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL]; Internal Revenue Service [IRS]; Centers for Medicare & Medicaid Services [CMS], U.S. Department of Health and Human Services [HHS])
Hey American Abroad, Do You Really Want to Make that Pension Contribution?
"[1] Does the U.S. have a double tax treaty with my country of residence that covers pensions? ... [2] Will the local tax benefits of participation simply result in a bigger U.S. tax bill? ... [3] Will my pension plan be treated as a foreign grantor trust for U.S. tax purposes? ... [4] Do Malta pension schemes provide a superior alternative pension platform for Americans abroad? ... [5] Do my U.S. retirement accounts create a local tax reporting problem? ... [6] Are IRA and 401(k) contributions permitted while I am living abroad?" (The Wall Street Journal; subscription may be required)
IRS Clarifies Documentation of FATCA Exemption for Savings Plans
"Exempt plans generally furnish a Form W-8BEN-E to any payers from which they receive U.S.-source income to certify their exempt status. However, the 2014 version of Form W-8BEN-E did not provide for such certification for plans meeting the savings plan exemption. This has been rectified in the April 2016 revision to that form, which now allows filers to indicate exempt status for retirement savings accounts that are not considered financial accounts." (Willis Towers Watson)
[Guidance Overview] New EU Data Privacy Regulation May Impact U.S. Benefit Plan Administrators (PDF)
"US plan administrators may need to comply with the Data Privacy Regulation if the plan administrator gathers, processes, or has another entity gather or process personal data of individuals in the EU and it is determined that the processing is related to the offering of goods or services to EU residents.... [P]rocessing data in connection with the offering of pension or welfare benefits to EU residents could be deemed to be in connection with the offering of services ... [It] appears likely that administrators of both pension and welfare plans will be deemed to gather or process some personal data if any plan participant or beneficiary resides in the EU." (Groom Law Group)
Worse Than It Looks: The True Burden and Risks of Federal Employee Pension Plans in Canada (PDF)
16 pages. "Federal government employees enjoy pure defined-benefit pensions that promise relatively generous benefits to a large current and former workforce.... [M]isleading accounting understates the true burden and risks these plans create for Canadian taxpayers ... To relieve taxpayers of their current sole responsibility for risks in the federal plan, Ottawa would need to switch to a shared-risk, target-benefit model already common in much of the provincial public sector, which calculates benefits with reference not only to salary and years of service but also to the plans' funded status." (C.D. Howe Institute)
A Framework for Multinational Defined Contribution Plan Governance
12 presentation slides. "Build efficient governance structures ... Weigh pros and cons of centralization in investment and other functions ... Define goals and align benefits ... Improve plans' effectiveness for participants." (State Street Global Advisors, for American Benefits Council)
Tax-Deferred Retirement Saving in Canada (PDF)
23 pages. "Canadian employers who sponsor retirement plans have mostly adopted arrangements that qualify for deferral of taxes. It is no longer clear that this is the best choice. Low interest rates and the emergence of Tax-Free Savings Accounts mean that there could be better alternatives for future generations of employees. This research report re-examines the effectiveness of tax deferral and other fundamental choices." (Society of Actuaries)
[Guidance Overview] New U.S. Model Tax Treaty Makes Pension-Related Changes (PDF)
"[T]he 2016 Model ... [adds] a protocol where contracting countries will expressly define what qualifies as a 'pension fund'. This is a departure from the 2006 Model where 'pension funds' included entities that are generally exempt from income taxation in a country and that operated principally either to administer or provide pension or retirement benefits or to earn income for entities that administer or provide pension or retirement benefits.... [T]he 2016 Model clarifies the tax treatment of income earned by a person from a pension fund in a different country in the event of a tax-deferred transfer to another plan." (Groom Law Group)
[Official Guidance] Text of IRS Notice 2016-14: Health Insurance Providers Fee; Procedural and Administrative Guidance (PDF)
10 pages. "Because guidance is needed for the 2016 fee year on the definition of expatriate health plan ... for purposes of Section 3(c)(1) of the [Expatriate Health Coverage Clarification Act of 2014 (EHCCA)], which excludes expatriate health plans from the Section 9010 [health insurance provider] fee beginning in 2016, this notice provides that solely for this limited purpose the definition of expatriate health plan will be the same as provided in the MLR final rule definition. No inference is intended regarding the definition of expatriate health plan in Section 3(d)(2) of the EHCCA for any other purpose, nor for purposes of the Section 9010 fee for later years." (Internal Revenue Service [IRS])
Employee Stock Plans: Year-End 2015 International Reporting Requirements
"This Commentary highlights some of the principal calendar and year-end reporting requirements for employee stock plans that U.S. companies most commonly encounter when offering these programs to their employees in selected jurisdictions worldwide. Please note that this Commentary does not address routine, year-end tax reporting obligations. A chart summarizing these items [is included]." (Jones Day)
Health Costs Soar for Employers Outside the U.S.
"Corporations outside the U.S. are generally seeing double-digit percentage rate increases between 9 and 20 percent in part because government coverage doesn't pay for all a patient's healthcare needs and workers turn to their employer to pick up the remaining tab ... [A new report] shows the average cost increases for employer sponsored medical plans are projected at 9.1 percent for this year. That's almost double the rate increase of U.S. employers and more than three percentage points higher than the 5.8 percent medical trend the report shows for North America." (Forbes)
Multinationals Grapple with Global vs. Local in DC Plans
"In [a] survey of multinational companies ... PIMCO found a diversity of strategies for managing DC plans in multiple countries. For example, 27% of respondents said they had a DC plan leader for each country; 23% said they had a global DC leader; and 19% said they had a DC leader for each region. Another 31% offered a mixture of responses ranging from a hybrid of the above answers to not having a specific global DC leader." (Pensions & Investments)
Pension Benefits Considerations for Multinational Companies: Cross-Border Issues in the Global Economy (PPT)
39 PowerPoint presentation slides, with commentary. "Employers operating in this environment must consider which benefit plans and programs will cover transferred employees, as well the impact their participation will have on the tax qualification of those plans.... [The presentation covers] certain problems encountered by U.S.-based multinationals that send their workers abroad, such as the structure and funding of their plans, as well as the U.S. taxation of their participants ... [and] consider[s] the problems of foreign multinationals operating in the U.S." (The Wagner Law Group)
[Guidance Overview] IRS Issues Interim Guidance on New Expatriate Law, Invites Comments
"[I]nsurers and employers will be given more time to bring their expat plans into compliance with the new law.... [T]he agencies will allow insurers and employers to use a reasonable good faith interpretation of the law.... [T]he reasonable good faith standard does not apply to ACA tax reporting requirements ... IRS tax forms [may] be supplied electronically to the enrollee (expat) without consent, unless the enrollee explicitly refuses electronic delivery.... [T]he PCORI fee won't apply if the plan or policy is designed and issued specifically to cover primarily employees [1] who are working and residing outside the United States, or [2] who are not citizens or residents of the United States but who are assigned to work in the United States for a specific and temporary purpose or who work in the United States for no more than six months of the policy year or plan year." (Lockton)
[Official Guidance] Text of IRS Notice 2015-43: Interim Guidance under the Expatriate Health Coverage Clarification Act of 2014 (PDF)
9 pages. "This notice provides interim guidance on the application of certain provisions of the [ACA] to expatriate health insurance issuers, expatriate health plans, and employers in their capacity as plan sponsors of expatriate health plans, as defined in the Expatriate Health Coverage Clarification Act of 2014 (EHCCA).... [T]he Departments have determined that issuers, employers, and plan sponsors need additional time and guidance to modify their current arrangements to comply with the EHCCA's requirements. Until the issuance of further guidance and except as otherwise provided in this notice, taxpayers are generally permitted to apply the requirements of the EHCCA using a reasonable good faith interpretation of the EHCCA. In particular, until the issuance of further guidance, treatment of an expatriate health plan, as defined in [ACA] Implementation FAQs Part XIII, Q&A-1, and FAQs XVIII, Q&A-6 and Q&A-7, as an expatriate health plan for purposes of the EHCCA is generally a reasonable good faith interpretation. However, these good faith rules do not apply with respect to the PCORI fee and the [ACA] section 9010 fee." (Internal Revenue Service [IRS])
10 Best Practices for Global Defined Contribution Plans (PDF)
24 pages. "Articulate objectives of total rewards globally. Assess your company's existing reward structures around the world. Seek ever-closer interaction between benefits functions globally. Establish a clear, flexible governance framework. Thoroughly understand and adhere to regulation, compliance and legislation. Decide on the degree to which the company employs a global investment philosophy. Seek efficiencies. Promote higher savings rates globally. Establish a specific plan for the transition from accumulation to de-accumulation. Create a strong employee communications program." (State Street Global Advisors)
[Guidance Overview] It's 2015 -- Are Your Plans Ready for FATCA? (PDF)
"When will withholding on US-source dividends and interest payments to non-US retirement funds begin? Depending on the US withholding agent, it may have already begun.... How does a retirement fund claim a FATCA withholding exemption? ... What can be done if withholding occurs anyway even though I believe the retirement fund should be exempt? ... When do plan participants and beneficiaries who are US persons (if the plan is not exempt) begin to be reported by Foreign Financial Institutions to the IRS? ... All of our non-US retirement fund assets are held by insurance companies or other foreign financial institutions. Do I need to do anything?" (Groom Law Group)
[Guidance Overview] Expatriate Health Coverage Exemption Enacted in Omnibus Spending Bill (PDF)
"Expatriate health plans are exempt from most of the ACA insurance market reforms. Expatriate health plans are exempt from the transitional reinsurance fee and the Patient Centered Outcomes Research Institute (PCORI) fee. After 2015, expatriate health plans are exempt from the health insurer fee (with special transition rules applying in 2014 and 2015). Employer-sponsored coverage for expatriates generally is exempt from the 40% high-cost plan excise tax in Code section 4980I, except for coverage provided to certain expatriates who are 'assigned' to work in the U.S." (Groom Law Group)
$1.5 Trillion Pension System Failing as Aussies Tick Bucket List
"More than two decades after Australia set up a compulsory retirement savings scheme, known as superannuation, to wean people off of state pensions, over-generous means testing has resulted in four out of five retirees still being eligible for such welfare. The nation's A$40 billion ($30 billion USD) annual pension bill accounts for 10 percent of government spending and is destined to grow in a country with one of the world's highest life expectancies." (Bloomberg)
[Official Guidance] Text of IRS Notice 2015-29: Application of ACA Fee on Health Insurance Providers to Expatriate Health Plans (PDF)
"Notice 2014-24 allowed a covered entity to exclude 50% of its direct premiums written for expatriate health plans ... for purposes of determining the fee for the 2014 and 2015 fee years.... [The Expatriate Health Coverage Clarification Act of 2014 (EHCCA)] provides a special rule that applies solely for purposes of determining the fee under Section 9010 for fee years 2014 and 2015.... [which] proportionally reduces the fee of a covered entity with expatriate health plans to account for its net premiums written for those plans.... To claim the benefit of the special rule ... a covered entity that satisfies the requirements in Section 3.01 of this notice must report its direct premiums written for expatriate health plans as reported on its [Supplemental Health Care Exhibits] on a statement attached to its 2015 Form 8963 that includes the certifications described in Section 3.02 of this notice... The IRS will apply the special rule for both the 2014 and 2015 fee years by adjusting the 2015 fee rather than by issuing refunds." (Internal Revenue Service [IRS])
Navigating the Complexities of International Emergency Medical Policies
"U.S. employers may also fail to realize that when their international (non-U.S.) employees leave their home country (whether to come to the U.S. or go elsewhere in the world) they do not automatically have emergency medical coverage under a domestic plan from their home country. So for example, when your German employee comes to the U.S. on a business trip, he or she has no medical coverage while in the states unless a specific policy was purchased for that purpose.... [If] that same German person went to France, he or she would be covered for needed medical services since E.U. countries have treaties with one another that covers this situation.... [S]ome countries, like Germany, legally require travel medical insurance for employees traveling out of country on business. If there is no policy in place you may be violating German labor law with all its related consequences." (William Gallagher Associates)
Britain's Top Doctor Says National Health Service May Be Forced to Abandon Free Healthcare for All
"The NHS is 'not fit for the future' and unless it undergoes radical change it may be forced to abandon free healthcare for all, in the future, the service's top doctor has warned. Medical director of NHS England Professor Sir Bruce Keogh said the NHS must become far less reliant on hospitals and needed a 'complete transformation' of the way it operates.... 'This will open up a whole series of discussions about whether the NHS is fit for purpose, whether it's affordable, and whether the compact with the citizen of free healthcare for all is sustainable in the longer term.' " (Daily Mail)
IRS Releases 2015 Form 1042-S Instructions
"The IRS has released the detailed 2015 instructions for Form 1042-S, Foreign Person's U.S. Source Income Subject to Withholding. The form is to report amounts paid from IRAs and retirement plans to certain foreign persons, including nonresident aliens. One noteworthy change is that beginning January 1, 2016, if disbursements are paid to multiple accounts, each payment will require a separate Form 1042-S. Formerly, such amounts having the same income code could be aggregated on a single Form 1042-S." (Ascensus)
[Guidance Overview] Congress Clarifies Expatriate Health Coverage Exemption
"Last December, Congress enacted the [Expatriate Health Coverage Clarification Act of 2014 (EHCCA)] as Division M of the Consolidated and Further Continuing Appropriations Act, 2015.... Particularly key for purposes of the ACA's minimum essential coverage requirement is the EHCCA's requirement that expatriate health plan sponsors have a reasonable belief that the benefits provide minimum value coverage requiring the plan to pay at least sixty [60] percent of the total allowed costs." (Ogletree Deakins)
2014 International Pension Plan Survey Report
"This report outlines the results of the 2014 International Pension Plan (IPP) survey, ... focusing on specific plan design aspects, eligibility and membership criteria, as well as investment features for IPPs and International Savings Plans (ISPs).... [T]here was a 67% increase in new IPPs and ISPs reported as having been established compared to 2013, a clear reversal in the declining numbers seen in recent times.... This year the IPP Survey contains a feature article on 'The many uses for an International Pension Plan (IPP) or an International Savings Plan (ISP)' which describes the variety of employee groups employers are including within their IPP/ISPs." (Towers Watson)
New IRS Rules for Claiming U.S. Tax Benefit in Canadian Retirement Plans
"U.S. citizens and residents with interests in certain types of Canadian registered retirement plans may now be treated as having elected to defer U.S. income tax on plan earnings until a distribution is made, if eligibility conditions are satisfied. Until now, participants had to affirmatively elect to defer the taxes on the earnings every year. Moreover, the relief is retroactive." (Towers Watson)
[Guidance Overview] CRomnibus Provisions Include Expatriate Health Plans / ACA Funding
"The act provides expat health plans with relief from the PPACA, requires additional PPACA disclosures and defunds some PPACA provisions.... The administration's 2016 budget submission must identify all funds spent by CMS on the public insurance exchanges." (Towers Watson)
[Opinion] Are Pensions Systemically Important in Canada?
"[T]he Deputy Governor of the Bank of Canada spelled it out clearly, pension funds in general, 'are not a source of systemic risk' and because of their long investment horizon, they are a net provider of liquidity and collateral to the system, 'especially in times of stress.' So why would we want to introduce a new federal regulator who has the power to encroach and/or restrict investment decisions made by pensions? While there's definitely a rationale to have a central securities regulator, the proposed legislation needs to be significantly revised, especially as it pertains to pensions." (Pension Pulse)
[Guidance Overview] Expatriate Plans Exempted from Many ACA Provisions
"Although the exemption is extensive, expatriate plans must continue to meet certain ACA requirements.... [1] The employer mandate continues to apply, but the coverage provided by an expatriate plan will be deemed to be minimum essential coverage for purposes of complying with the mandate (and for purposes of the individual mandate). [2] Reporting requirements relating to the employer and individual mandates will apply, although electronic distribution of applicable forms will be permitted without participant consent. [3] The Cadillac tax, scheduled to take effect in 2018, will apply to certain foreign nationals working in the United States. [4] If the expatriate plan covers dependents, it must generally provide coverage up to age 26." (Ballard Spahr LLP)
[Guidance Overview] Expat Act Expands Relief from ACA Requirements
"Expatriate plans are permanently exempt from many of the ACA requirements ... [and are] deemed to satisfy the individual and employer mandates. While in the past, these provisions were only extended to fully insured plans, the new law provides relief from ACA requirements to self-insured expat plans as well. However, expat plans must meet specific participation and coverage requirements in order to be eligible." (William Gallagher Associates)
U.K. Considers Allowing Retirees to Exchange Monthly Payments for Lump Sum Cash-Out
"Older Britons who currently receive a monthly pension from an annuity may be able to sell their right to a regular income for upfront cash, under proposals being considered by the government. Last year Britain announced plans to ease requirements on new retirees to use any private pension savings to buy an annuity, which offers a guaranteed income for life.... Historically Britain has required people who have taken advantage of generous tax breaks to build up private pension savings to buy an annuity on retirement, so that they do not end up a burden on the state." (Reuters)
Employee Stock Plans: Year-End International Reporting Requirements
"This Commentary highlights some of the principal calendar and year-end reporting requirements for employee stock plans that U.S. companies most commonly encounter when offering these programs to their employees in selected jurisdictions worldwide.... A chart summarizing these items [is included]." (Jones Day)
[Official Guidance] Text of IRS 2015 Draft Instructions for Forms 1099-R and 5498: Distributions from Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc., and IRA Contribution Information (PDF)
24 pages. "What's New: FATCA filing requirements of certain foreign financial institutions (FFIs). Beginning in 2014, an FFI with a chapter 4 requirement to report a cash value insurance contract or annuity contract that is a U.S. account held by a specified U.S. person with the FFI may satisfy this requirement by electing to report the account in a manner similar to that required under section 6047(d). Form 1099-R is to be used for such reporting. See Regulations section 1.1471-4(d)(5)(i)(B) for this election. Also see Regulations section 1.1471-4(d)(2)(iii)(A) for how a U.S. payor may satisfy its chapter 4 reporting requirements by reporting on Form(s) 1099." (Internal Revenue Service [IRS])
[Guidance Overview] Expat Plans Exempt from the ACA -- But It's Not a Free Pass
"The Expat Act makes the temporary transition relief permanent and expands its application to include self-insured expat plans. Both come as a welcome adjustment for employers, but the gift from Congress is not without strings. Expat plans seeking relief under the Expat Act must satisfy participation and coverage requirements.... Perhaps most importantly, qualifying expat plans are considered minimum essential coverage for individuals and for employers sponsoring them. The same plans, however, will still be subject to the Cadillac Tax and employer's sponsoring such plans are still required to complete the Code Section 6056 reporting requirements (although statements to employees may be sent electronically)." (Hill, Chesson & Woody)
[Guidance Overview] Spending Law Exempts Certain Expatriate Health Plans from Most ACA Provisions
"Those who sponsor or advise expatriate health plans are likely to welcome the additional certainty provided by this legislation -- although clarification on how the July 1, 2015 applicability date relates to existing plans would be welcome. And the details will require careful review; while broadening the prior relief to include self-insured plans, the new law also imposes some very specific coverage standards for all expatriate health plans. Meanwhile, the funding provisions suggest that the new Congress may attempt to hamper further implementation of health care reform through its control of the purse strings -- a prospect that bears watching." (Thomson Reuters / EBIA)
[Guidance Overview] CRomnibus includes 'Expatriate Health Coverage Clarification Act' (PDF)
"The CRomnibus provides a permanent statutory exemption from most of the ACA's requirements for statutorily-defined 'expatriate health plans.'... Expatriate health plans now officially qualify as an eligible employer-sponsored plan that is minimum essential coverage. This means that an expatriate health plan will satisfy the enrollee's individual mandate.... [T]he exemption does not apply for the new health information reporting requirements for the beginning of 2016." (ABD Employee Benefits)
U.K. Insurance Overhaul Doesn't Make for a Happy Retirement
"The U.K. government this year scrapped the compulsory purchase of an annuity at retirement after several years of low interest rates had turned an unpopular product into a downright unattractive one. Pity those who had bought an annuity shortly ahead of that decision in March. But now, the consumer financial watchdog has given them scope to get out of those deals, or eke a bit more from their provider. A review of selling practices in the past five years has found that insurers didn't do enough to help customers exploit what little choice they had in buying an annuity." (The Wall Street Journal; subscription may be required)
Pension Firms Accuse EU Regulator of Over-Reaching Authority
"Europe's pensions industry has accused its European Union regulator of overreaching its authority by pursuing plans to develop what pension funds say amounts to a new and onerous capital regime that could hurt their investing decisions.... The rules would force funds to use European instead of national standards in calculating the value of their assets and liabilities, allowing for comparison of the state of pension funds in different countries." (The Wall Street Journal; subscription may be required)
New Simplified Procedures Allow Participants in Certain Canadian Retirement Plans to Defer Taxation Until a Distribution Occurs
"[Rev. Proc. 2014-55] removes the requirement to file Form 8891 -- both to elect the tax treaty benefit and as an ongoing reporting requirement. In addition, retroactive relief applies to any individual who was eligible to make the tax treaty benefit election and failed to do so. Such individuals will be treated as if they had made the election in the first year that they were eligible to do so." (Ascensus)
[Official Guidance] Text of Rev. Proc. 2014-55: Election Procedures and Information Reporting with Respect to Interests in Certain Canadian Retirement Plans (PDF)
"Subject to any future guidance that may be issued by the Treasury Department and the IRS, beneficiaries ... and annuitants are not required to report contributions to, distributions from, and ownership of a Canadian retirement plan under the simplified reporting regime established by Notice 2003-75 (Form 8891) or pursuant to the reporting obligations imposed by section 6048 (Form 3520). In addition, custodians are not required to file Form 3520-A with respect to a Canadian retirement plan.... This revenue procedure obsoletes Form 8891 as of December 31, 2014." (Internal Revenue Service [IRS])

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