Do I need to file?

The three categories

When a U.S. person has a connection to a foreign arrangement that the IRS treats as a trust, the reporting obligation depends on the person’s role and how the arrangement is classified:

• Foreign grantor trust. A U.S. person is treated as the owner of the trust for tax purposes. This triggers annual reporting on both Form 3520 (Part II) and Form 3520-A. This is the most common category for foreign pensions and retirement accounts.
• Foreign non-grantor trust. No U.S. person is the owner. The trust is a separate taxpayer. A U.S. beneficiary reports only when they receive a distribution (Form 3520, Part III). There is no annual Form 3520-A obligation for the beneficiary.
• Exempt or excluded arrangement. Certain foreign plans are excluded from §6048 reporting entirely—either by statute, IRS notice, or treaty. If your arrangement falls here, you may have no Form 3520 obligation at all.

The rest of this page explains how to tell which category applies and where the exemptions are.

Foreign grantor trusts

Under IRC §679, a U.S. person who directly or indirectly transfers property to a foreign trust with any U.S. beneficiary is treated as the trust’s owner for income tax purposes. The “U.S. beneficiary” definition at §679(c) is broad: the trust has a U.S. beneficiary unless no part of its income or corpus could ever be paid to or accumulated for a U.S. person, including on termination.

This is the category most foreign pension and retirement accounts fall into. When you contribute to a foreign superannuation fund, workplace pension, or provident fund, you are transferring property to a foreign trust with yourself (a U.S. person) as a beneficiary. That makes you the deemed owner.

Filing obligation: Form 3520 (Part II) and Form 3520-A every year the trust exists, regardless of whether anything happened in the trust that year. Income is reported on Form 1040 in the year earned, with no deferral.

For a detailed breakdown of the grantor trust rules (§§671–679), see Grantor vs. non-grantor trusts.

Foreign non-grantor trusts

A foreign trust is a non-grantor trust when no U.S. person is treated as the owner under §§671–679. The most common scenario: a non-U.S. person established the trust for the benefit of family members, some of whom happen to be U.S. persons.

Filing obligation: A U.S. beneficiary files Form 3520 (Part III) only in years they receive a distribution from the trust. There is no Form 3520-A obligation for the beneficiary. When the distribution includes income that accumulated over prior years, the accumulation distribution rules (§§665–668) apply, which can produce a throwback tax and interest charge computed on Form 4970.

A U.S. person who transfers property to a foreign trust established by someone else (e.g., contributing to a non-grantor family trust) reports that transfer on Form 3520, Part I, in the year of the transfer. This is a one-time reporting event, not an annual obligation.

For more on how distributions are taxed and the throwback rules, see Grantor vs. non-grantor trusts.

Foreign pensions

Foreign pensions are where the classification question gets complicated. There is no blanket “pension exemption” from Form 3520 reporting. Instead, the treatment depends on the specific type of plan, the country, and whether any relief provision applies.

Default treatment: pension as foreign trust

Most foreign pensions and retirement accounts are classified as foreign trusts under Treas. Reg. §301.7701-7. A pension fund that fails either the “court test” (a U.S. court does not have primary supervision over its administration) or the “control test” (U.S. persons do not control all substantial decisions) is a foreign trust. Nearly all non-U.S. pension arrangements fail one or both.

Once classified as a foreign trust, the pension is typically a grantor trust under §679 because the employee (a U.S. person) has transferred property (contributions) to a foreign trust with a U.S. beneficiary (themselves). This triggers annual reporting: Form 3520 Part II and Form 3520-A.

Common pension types and their treatment

An important distinction: a tax treaty that lets you defer income recognition on a foreign pension does noteliminate the §6048 information reporting obligation. Treaty deferral and reporting are separate requirements. You may owe no tax on the pension income while still being required to file Forms 3520 and 3520-A.

Employee benefit plans & §402(b)

IRC §402(b) governs the tax treatment of employees who participate in a trust that is part of an employer plan but does not meet the requirements of §401(a) (i.e., it is not a qualified plan under U.S. standards). Most foreign employer pension plans fall here.

Under §402(b), the employee’s rights in the trust are taxed as follows:

• If the employee’s interest is vested: the employer’s contribution is included in the employee’s gross income in the year of the contribution (§402(b)(1)).
• If the interest is not vested: taxation is deferred until the interest vests or a distribution is made (§402(b)(4)).

The question of whether a §402(b) plan is also subject to §6048 trust reporting is not fully settled. The IRS has not issued comprehensive guidance on the intersection of §402(b) and §6048. In practice, many practitioners take the position that a foreign pension plan taxed under §402(b) is still a foreign trust for §6048 purposes and file Forms 3520 / 3520-A as a protective measure. Others argue that if the employee is already being currently taxed on contributions under §402(b), the trust reporting requirements are redundant.

Until the IRS provides definitive guidance, the conservative approach is to file. The penalty for failing to file (§6677) can be substantial, while filing unnecessarily carries no penalty.

Notice 2003-75

IRS Notice 2003-75 provides limited reporting relief for U.S. persons who participate in certain foreign retirement trusts. Under the notice, the IRS stated that it intends to issue future guidance exempting certain foreign pension arrangements from §6048 reporting. Until that guidance is issued, the notice provides that the IRS will not assert penalties under §6677 against a U.S. person who fails to report under §6048 with respect to a “tax-favored foreign retirement trust.”

What qualifies

To qualify for the Notice 2003-75 penalty relief, the arrangement must meet all of the following conditions:

• The trust is established in a foreign country to provide retirement or pension benefits.
• The trust is exempt from income tax (or subject to reduced tax) in the country where it is established.
• Annual information reporting about the trust is provided to the tax authorities in the country where it is established.
• The trust is generally accessible to employees working in that country or residents of that country.
• The U.S. person’s participation in the trust is nondiscriminatory (not a special arrangement for the specific employee).

Important limitations

• Notice 2003-75 is a penalty relief notice, not an exemption from the reporting requirement itself. The notice says the IRS will not assert penalties; it does not say you are excused from filing.
• The promised future guidance was never issued. The notice remains outstanding since 2003.
• Many practitioners still file Forms 3520 and 3520-A even for arrangements that qualify under the notice, on the theory that the filing obligation technically exists even though the penalty is suspended.
• The notice does not cover individually arranged retirement trusts, trusts used primarily for tax deferral of investment income, or self-settled offshore trusts that happen to be called “retirement trusts.”

Treaty-based relief

Some U.S. tax treaties contain provisions that allow U.S. persons to defer taxation on contributions to or earnings within foreign pension plans. The most commonly invoked examples:

• U.S.-Canada (Article XVIII). Allows a U.S. citizen or resident to elect to defer U.S. taxation on income accruing in an RRSP, RRIF, or certain other Canadian pension plans. Combined with Rev. Proc. 2014-55, this can exempt the plan from Form 3520-A (though not Form 3520).
• U.S.-UK (Article 18). Provides that contributions to a “qualifying pension scheme” may be deductible or excludable for U.S. tax purposes, and that income accruing in the scheme may be deferred. But no provision waives §6048 reporting.
• U.S.-Australia. The U.S.-Australia treaty does not contain a pension provision equivalent to the U.S.-Canada Article XVIII. Australian superannuation generally receives no treaty-based reporting relief.

The critical point: treaty provisions typically address the substantive tax treatment of pension income (deferral, deductions, exemptions). They do not address §6048 information reporting. A treaty may mean you owe no U.S. tax on your foreign pension contributions or growth, but you may still need to file Forms 3520 and 3520-A to report the arrangement’s existence and activity. The two obligations are independent.

What doesn’t require filing

Some foreign arrangements are genuinely outside the scope of Form 3520 reporting:

• Government-run social insurance. National pension programs (e.g., UK State Pension, Canada CPP/OAS, Australian Age Pension, German statutory pension insurance) are government social insurance programs, not trusts, and are generally not subject to §6048 reporting.
• Arrangements that are not trusts. Not every foreign financial account or investment is a “trust” under U.S. tax law. A foreign bank account, brokerage account, or insurance policy is not a trust (though it may trigger other reporting requirements like FBAR or Form 8938). The classification depends on the legal structure of the arrangement under Treas. Reg. §301.7701-7.
• Canadian RRSP/RRIF (partial). Under Rev. Proc. 2014-55, if the taxpayer has made the treaty election to defer income under Article XVIII of the U.S.-Canada treaty, the RRSP or RRIF is exempt from Form 3520-A filing. Form 3520 reporting may still be required.
• Foreign gifts (different rules). Receiving a gift from a foreign person is reported on Form 3520, Part IV, when the amount exceeds the annual threshold ($100,000 for gifts from nonresident alien individuals in most years; $19,502 for 2025 from foreign corporations or partnerships). But gifts are not trust reporting—they fall under a separate part of the form with different rules.

Decision guide

Use the following steps to determine where your foreign arrangement falls:

Sources

This page summarizes the law as of its last update and is not tax advice. The primary authorities are:

• IRC §6048 — Information reporting for foreign trusts (transfers, annual owner statements, distributions).
• IRC §679 — Foreign trusts having one or more United States beneficiaries.
• IRC §402(b) — Taxability of beneficiary of nonexempt trust.
• IRC §6677 — Penalties for failure to file information returns relating to foreign trusts.
• Treas. Reg. §301.7701-7 — Court test and control test for domestic vs. foreign trust classification.
• Notice 2003-75 — Reporting relief for certain tax-favored foreign retirement trusts.
• Rev. Proc. 2014-55 — Exemption from Form 3520-A for certain Canadian registered plans (RRSP, RRIF).
• Form 3520 Instructions (Rev. December 2025).
• Form 3520-A Instructions (Rev. December 2025).