How are Australian Superannuation Funds taxed in the U.S.?

How does the IRS treat contributions to my Superannuation Fund?

Your Australian employer is required to put 9.5%, the Superguarantee, of your salary into your Super.  The IRS considers the SG portion to be Social Security.  So, it is not included in income on your US return.  

Any amount above the SG amount is included in income on your US return.

Voluntary contributions are not concessional for US tax and are included in income as part of gross wages

How are withdrawals taxed by the IRS?

These benefits are partially taxable in the U.S. The taxable portion is determined by how much you and your employer have historically contributed to the plan.

Unfortunately, it does get complicated. Please refer to the pages below for more details:

409A Nonqualified Deferred Compensation Plans

Double taxation taxes on income Convention between the United States of America and Australia

Publication 575 (2017) Pension and Annuity Income

On which U.S tax and treasury forms should Superannuation funds be reported?

Your superannuation account must be reported on the  FBAR (FinCEN Report 114) and on Form 8938 in accordance with the Foreign Account Tax Compliance Act (FATCA). 

In addition, if you have a  Self Managed Super Fund (SMSF), it is considered a foreign grantor trust and requires the filing of Form 3520/3520-A. If the SMSF contains PFIC inside the SMSF, then Form(s) 8621 must also be filed. 

Example:

  • Australian SMSF documents show 5 mutual funds, direct dividends, interest, trust expenses and tax paid.
  • Proper filing of the SMSF account would require an additional form 3520a ($350), 3520 ($200), and form 8621 ($150 up to 3 accounts) under Sec.1296.

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