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US: Pension tax relief sought for all Americans abroad

Wednesday, 12 November 2014   (0 Comments)
Posted by: Author: Mike Swire
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Author: Mike Swire (

With American taxpayers newly able to easily secure more favorable US tax treatment for Canadian retirement plans, American Citizens Abroad had requested that such treatment should be extended worldwide to all foreign pensions and retirement savings.

Under the recent change, many Americans and Canadians with registered retirement savings plans and registered retirement income funds now automatically qualify for tax deferral under the US-Canada double tax agreement, similar to the treatment available to participants in US individual retirement accounts and 401(k) pension plans.

"ACA is pleased to see that the IRS has simplified the filing procedure for recognition of Canadian retirement plans so that they are easily and immediately treated as 'tax-free' savings and as the equivalent for US tax filing purposes," stated Jackie Bugnion, ACA Tax Team Director.

ACA has long recommended that the IRS 'correct' the tax treatment of foreign pension and retirement savings plans. Until a change occurs, both individual and company contributions to foreign plans are generally taxed as income.

"This increases the tax burden for Americans overseas who are mandated in many cases to contribute to these plans in the foreign jurisdictions where they work," Marylouise Serrato, Executive Director of ACA, added. "The increased tax burden can be significant as plans providing deferred taxation by foreign countries are immediately taxed by the US."

The ACA has therefore urged Congress to extend automatic recognition for foreign pension and retirement savings plans throughout the world. "Reducing the double taxation burden caused by foreign retirement plans would make it easier for Americans to compete in overseas markets," Serrato concluded.

This article first appeared on

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