(Archived Content)
FROM THE OFFICE OF PUBLIC AFFAIRS
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Today, the Treasury Department and the IRS issued guidance on the treatment of pension distributions made by a U.S. qualified plan to a nonresident alien individual. Revenue Procedure 2004-37 provides guidance in particular for determining the tax withholding obligations of those persons responsible for making payments from a U.S. defined-benefit pension plan to a foreign person.
The revenue procedure provides detailed rules for determining the U.S.-source portion of a pension distribution under a defined-benefit plan in cases where the retiree has performed services both in the United States and abroad during his or her employment. For pension distributions that take the form of a lump-sum distribution or a straight life annuity, the revenue procedure sets forth an actuarial method for apportioning the distribution between deemed employer contributions and deemed earnings and for apportioning those deemed contributions between services performed within the United States and services performed outside the United States. For other forms of pension distribution, the revenue procedure provides guidance on appropriate assumptions that may be used to apportion a distribution between sources within the United States and sources outside the United States.
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