US tax/FBAR filing for Employees' Pension Fund (EPF)

Post Reply
Decchan
Newbie
Posts: 14
Joined: Sun Feb 02, 2020 9:16 am

US tax/FBAR filing for Employees' Pension Fund (EPF)

Post by Decchan »

Is anyone familiar with the concept of a Kosei Nenkin kikin, or Employees' Pension Fund (EPF)? It is, as the name implies and as shown in the pictures here (https://www.nenkin.go.jp/international/ ... nsion.html and https://www.nenkin.go.jp/service/seidoz ... 40710.html), a scheme that is an outgrowth of the traditional kosei nenkin under Japan's social security program. I do not know too much about their interworkings, but according to my wife these have mostly fallen out of favor in recent years and only a few of them still exist.

One is the 出版厚生年金基金, for publishing companies, which I was enrolled in between 2011-2015 during my employ at a relevant publishing/translation company. I had long forgotten about it, until a couple weeks ago when I found some old paperwork for me to apply for the lump sum payment (post-tax) that I am eligible to receive (a small sum just around 150,000 yen; I am ineligible to receive post-retirement yearly distributions as my length of employ was too short). I have yet to receive this lump sum payment, which would not be taxed in Japan, but I imagine would be subject to taxation in the US.

But my biggest concern: I have never mentioned the existence of this fund on my tax forms or FBARs. What are my obligations on this front? If it is part of the kosei nenkin scheme it would then benefit from the social security totalization agreement like kosei nenkin does? (Uh btw, enrollment/contributions to a standard Kosei nenkin *does* not require any US tax/FBAR reporting, correct?)

More info: I did find a short English explanation of the EPF through a google search that may or may not be accurate: https://www.jpac.co.jp/english/glossary ... _fund_epf/
TokyoWart
Veteran
Posts: 769
Joined: Tue Oct 02, 2018 8:39 am
Location: Tokyo

Re: US tax/FBAR filing for Employees' Pension Fund (EPF)

Post by TokyoWart »

In your position I would not worry about the lack of FBAR reporting of that pension fund. The amount is clearly below the $10,000 threshold (albeit an account needs to be included if the sum of your accounts ever crosses $10,000) but more importantly from what you described it isn't clear this was a segregated account. A segregated account would be something similar to a US 401K or IRA where you get a statement each year of your balance and how it has grown. A nonsegregated account is something like an employer pension or Kosei Nenkin (which does not require reporting) where you are accumulating a benefit over time but you can never say, "My account is worth 2 million yen this year and it grew by 20% since last year." The following article in the CPA journal includes this statement:

"Reporting a foreign retirement plan will differ depending upon the type of plan and form. A foreign retirement plan is only reportable on an FBAR if it is associated with a segregated foreign retirement account, since it is the foreign account—not the plan itself—that triggers the obligation to file the FBAR. Assuming that the aggregate $10,000 reporting threshold has been met, an individual with a foreign retirement account will need to report the highest balance in the retirement account at any point during the tax year. Neither a foreign employer-created pension (which involves only a right to receive payments on retirement) nor a foreign equivalent of Social Security would qualify for reporting on an FBAR, however, as there is no foreign account to report in those situations."

https://www.cpajournal.com/2020/03/03/r ... n-returns/
User avatar
RetireJapan
Site Admin
Posts: 4347
Joined: Wed Aug 02, 2017 6:57 am
Location: Sendai
Contact:

Re: US tax/FBAR filing for Employees' Pension Fund (EPF)

Post by RetireJapan »

We wrote (in a confused way) about kokumin nenkin kikin: https://www.retirejapan.com/blog/overpa ... in-nenkin/

I didn't know there was a kosei nenkin kikin. Sounds promising! (but I guess it has the same contribution limits as iDeCo for kosei nenkin payers?). Might be worth looking at, particularly for US citizens that can't use iDeCo effectively.

Kokumin nenkin kikin at least is not an individual account, you are contributing extra to nenkin in exchange for additional payments alongside nenkin later.
English teacher and writer. RetireJapan founder. Avid reader.

eMaxis Slim Shady 8-)
Decchan
Newbie
Posts: 14
Joined: Sun Feb 02, 2020 9:16 am

Re: US tax/FBAR filing for Employees' Pension Fund (EPF)

Post by Decchan »

So just to be clear I already file an FBAR every year (because I have more than 10k in my bank account). I suppose this EPF however had no clear value while I was employed so it would not have even been possible to report during 2011-2015. I suppose I maybe could have listed the lump sum "surrender value" on my FBARs since then, though I imagine it was not necessary to do so. I think I may not bother to do it this year either.

But I still wonder about the tax implications of this outstanding lump sum payment I have to my name if I cash it in sometime this year. I guess I need to find out how expat retirees report their retirement income to the US?

Anyways, thanks!
Post Reply