>Revenue Procedure 2004-37 offers plan sponsors the purpose, method and scope of the method for determining the source of a pension payment to a nonresident alien. The revenue procedure covers pensiondistributions that take the form of a lump-sum distribution or astraight life annuity, the IRS said in a news release.
>Additionally, the Revenue Procedure also provides a method to determine the total contributions to a defined benefit plan of the nonresident alien, which the IRS defines as the product of the three quantities multiplied by one another:
- present value of the individual’s pension payable at the annuity starting date;
- the proper amount from a supplied table that when contributed on an annual basis, will accumulate to $1.00 at the starting date;
- number of years from when the individual became a participant to the annuity starting date.
>Further, the Revenue Ruling lays out the calculations necessary to derive the three factors. Example of different scenarios are also provided to assist plan sponsors, such as how to determine theU.S.-source portion of a pension distribution under a defined-benefitplan in cases where the retiree has performed services both in theUnited States and abroad during his or her employment.
A copy of Revenue Procedure 2004-37 is available at http://www.treas.gov/press/releases/reports/rp%20200437.doc.
« ASPA Offers Online CE Access