Lost in Space – The reason so many American Expats will suffer a 100% loss in their overseas Group Pension Scheme is because neither attorneys nor tax consultants are regulated, registered and recognized IRC 402(b) product providers. Therefore,
1) Group Attorneys can draw a legal blueprint of a IRC 402(b) Foreign regulated, FATCA registered and IRS recognized occupational retirement plan.
Their problem is that they, themselves, are not in the business of producing and administrating iRC 402(b)plans. Meaning to say they can show you a picture of what one looks like but they can’t function because they do not produce/administer these plans.
They are also not an occupational government regulated, FATCA registered and IRS acknowledged fiduciary
2) A high-priced Tax consultant (hired by the group) can look at the legal blueprint of any functional retirement plan and tell you which reporting forms need to filed, to whom and to where.
Tax consultants have the same problem as attorneys in that they, themselves, are not in the business of producing a plan, administrating a plan nor are they a government regulated, FATCA registered and IRS acknowledged plan fiduciary.
To make matters worse, and expert advisers even harder to find, is that some of the largest offshore investment sales and marketing companies are selling investment products from pre-FATCA that have been given new names and packaging.
Financial Intermediary FATCA Overseas Nightmare
ACME Investments of China marketing game-plan, was to sell a 101% life policy to the PRC people as tax deferred asset protection WRONG
1) For a PRC person to purchase this policy would be a violation of exchange control laws in the PRC – CRIMINAL
2) a 101% life policy in US terms is not a life policy it is a PFIC (passive foreign investment company). No tax deferral in fact annual tax on growth of 36.9% and an 8621 filing on each investment inside that wrapper. Massive paperwork. Also it would immediately be captured by the IRS Computer and the client would be called in for a Tax Audit.
Now, one more thing that is revealing about that 101% wrapper
3) Our team has had tons of experience of people that have one of those and they Die. What happens? You would think that the “life company” would immediately pay the beneficiary 101% as a death benefit. Nope. The life company must first sell the assets within the policy and the Trustee has never ever seen anyone receive more than 95%. Die and your beneficiary learns the truth!
Another Offshore FATCA Myth is Busted
Singapore calls it the Central Provident Fund which is actually a false read because is in fact monetary control and has nothing to do with retirement.
They say it is for retirement but it is not really because Singapore does not actually have a proper pension law itself. This was highlighted several years ago in a British Tax case where the British said you don’t have a pension law.
Singapore doesn’t even have a proper Double Tax Agreement because of their demand to do what they like. They did not agree to demands to change their tax laws.
Yes, your client must participate; it is like a tax. When he leaves he can take the money out. Everybody is stuck with that but there are additional problems when depending on the nationality of his spouse because that has an impact as well.
Therefore, if a person is working in Singapore it is better to use our Hong Kong Pension Fund which solves a number of different issues in succession law, divorce and he can have tax deferred remunerations and accumulations.
Our legal team have done this before where the client’s employer would make pre-tax contributions that would not be subject to local social taxes and his accumulations would grow tax deferred.