The deadline for filing the Report of Foreign Bank and Financial Accounts, Form TDF 90-22.1, (FBAR) by U.S. persons that held a financial interest in a foreign financial account for calendar year 2009 if the aggregate value of all the U.S. person’s foreign financial accounts exceeded $10,000 at any time during the year is almost here — all FBAR filings must be received by the U.S. Department of Treasury on June 30, 2010 (not just postmarked by such date). There are no extensions and the failure to file an FBAR can result in significant penalties.
As discussed in our March, 2010 blog entry on the FBAR filing requirement, the term “financial interest” is defined very broadly. In the case of pension plans, it would include any employee benefit plan that maintains an investment in a foreign financial account and also applies to the institutional trustees or board of trustees of such plan. It may also apply to the individual members of the board of trustees of a plan or a plan sponsor. Accordingly, some individual trustees and plan sponsors may want to file the FBAR on a protective basis.
The upcoming June 30, 2010 deadline relates to any foreign financial account maintained in calendar year 2009, but a plan should also consider whether a filing obligation existed for a prior calendar year that may not have been satisfied.
To determine whether the plan, its sponsor, and its trustees have an FBAR filing requirement, we suggest the following:
- Have the plan’s investment consultant or committee advise as to whether the plan has invested in any foreign entities.
- Have the plan’s investment consultant or committee advise as to whether any of the separate account managers has invested in foreign securities and has established a foreign custodial or other foreign financial account in connection with those investments.
- Have the plan’s accountant or tax preparer review the results of the investment consultant’s or committee’s inquiries and assist in completing the relevant forms, if necessary.
Note: U.S. persons that have only signatory authority over (but no financial interest in) a foreign financial account are not required to file the FBAR until June 30, 2011.
For an overview of the FBAR filing requirements and FBAR defined terms, please read our March 29, 2010 blog entry. For more information on the upcoming deadline and other plan filing requirements based on alternative investments, please read Proskauer’s Client Alert on this topic.