Construct legally a tax compliant IRC 402(b) retirement plan in a way that is optically good for U.S. Persons so they are relaxed, they are U.S. Tax and reporting compliant and the bulk of their contributions will be in US Dollars so we need a US Dollar clearer.
Retirement law is not a tax haven, insurance product or company, nor a personal trust. Internationally recognized retirement law is carved out under the Foreign Account Tax Compliance Act (FATCA), carved out under Common Reporting Standard (CRS), Automatic Exchange of Information (AEoI) and specifically mentioned in Double Tax Agreements (DTA); unlike banks, law firms, LLC’s and insurance companies which are not even mentioned.
The 402(b) checks all the regulatory compliant boxes on Anti-Money Laundering (AML), U.S. Treasury and Internal Revenue Service (IRS) and Foreign Account Tax Compliance Act (FATCA) rules.
IRC 402(b) is the only type of existing foreign financial account that individuals can use to defer income on gains and accumulations. That it is a tax rules compliant and excluded account is a recognized category on four different IRS Forms -8957,8621,3520 and W-8BEN-E). Investing deferred income increases yield and this tax affected yield beats anyone’s yield.
Reporting is in 3 separate areas:
Firstly, within the U.S. AML and FATCA because this retirement account is registered as a non-US resident, non-US person because the Trustee is Foreign Retirement Plan Government Regulated, Registered and Recognized and the Trustee appoints an administrator. The administrator never touches the money and this service Structure creates the “Triangle of Security”
Secondly, the contributions (investment sums) are received by the U.S. Custodian who identifies receipt of contribution to the client.
Thirdly, the Custodian collected cash and disburses it to the offshore Investment Platform which is entirely segregated from the IRC 402(b) Trustee. The Investment Platform provides 24 hour internet access to the client’s account.
There are two types of retirement plan accounts the client can enter that release him from providing a W-9 to any financial institution because the 402(b) Trustee provides a W-8BEN-E U.S. Person tax rules compliant and excluded account:
1) W-8BEN-E box 29(b) or 29 (e)
(b) no member with more than 5% of assets
(e) exclusive for a retirement fund
Coming up in 2017 we have the ”Son of FATCA” the Automatic Exchange of Financial Information (AEoI)(Over 100 countries), and guess what is carved out as exempt from this OECD financial information reporting on beneficiaries of financial accounts? Answer: W-8BEN-E box 29(b) or 29(e).
AEoI non U.S. version is multilateral agreement rather than bilateral agreement as there is under FATCA. The specific exemption in Hong Kong Inland Revenue Tax Authority is a clone in every multilateral agreement as seen in Schedule 17c classification that it is automatically excluded from AEOI
Therefore, you are totally compliant and don’t need to think about it.