Hi all and thanks in advance for any help that can be provided.
I’m hoping someone can point me in the right direction regarding a PFIC I am invested in (out of ignorance that it was a PFIC, and the tax implications, until now).
I am a US Citizen, German Resident. It is a German mutual fund/securities account that I established in February 2016. It’s a small account that is essentially an employer-incentivized savings plan (Vermögenswirksame Leistung—employer pays an additional €40/month to employee for deposit/purchase into this securities account). Still, it’s a German mutual fund account (DEKA-BasisAnlage A100, ISIN: DE000DK2CFT3) in my name only.
As of the end of 2020 (Dec. 31, 2020), the account was valued at €2,661.57. I have paid €40 monthly since February 2016, so through 2020 € 2,360 in principal has been invested. There has also been an annual dividend/distribution paid that I’ve had automatically reinvested:
2016 – €3.06
2017 – €1.07
2018 – €8.30
2019 – €5.97
2020 – €1.22
Total Reinvested Dividends/Distributions: €19.62
Total Principal Paid in: €2,360 (€40 monthly payments)
Principal Investment (for time period 02/2016-12/2020): €2,379.62
Value of mutual fund on 12/31/2020: €2,661.58.
Of course missing/not considered is current value of fund and €40*3 monthly payments already in 2021.
I’ve been reading up about PFIC ‘handling’ and know ‘excess distribution’ is an important distinction. I’m assuming based on what I’ve read that these distributions, even though small amounts, qualify (at least some do) as excess distributions. Because of this I am thinking I (unfortunately) do not qualify for the exception to file Form 8621 (the value being well under $25,000).
I understand there are 3 different tax schemes – Tax and Interest scheme; Qualified Electing funds; Mark to Market Schemes.
I have NOT accounted for it in my taxes since 2016 outside of listing the account on FBAR submissions. I mistakenly thought I would only have to account for it when I ‘sell’ the fund—the terms of the bank contract have the payout scheduled for 02/2023. I didn’t look closely enough at the yearly paperwork to even notice the tiny dividends paid out (reinvested). I always thought it was just an untouchable account and I would report capital gains at the end of 7 years (the contracted ‘savings period’ for the product).
At this point, I am seeking tax advice on the best way forward given my situation. I am more concerned with being compliant than any gains (or losses created due to this situation) from this small account, and understand there will be costs associated with ‘fixing’ this.
Thanks again for any assistance and feedback…
I’m hoping someone can point me in the right direction regarding a PFIC I am invested in (out of ignorance that it was a PFIC, and the tax implications, until now).
I am a US Citizen, German Resident. It is a German mutual fund/securities account that I established in February 2016. It’s a small account that is essentially an employer-incentivized savings plan (Vermögenswirksame Leistung—employer pays an additional €40/month to employee for deposit/purchase into this securities account). Still, it’s a German mutual fund account (DEKA-BasisAnlage A100, ISIN: DE000DK2CFT3) in my name only.
As of the end of 2020 (Dec. 31, 2020), the account was valued at €2,661.57. I have paid €40 monthly since February 2016, so through 2020 € 2,360 in principal has been invested. There has also been an annual dividend/distribution paid that I’ve had automatically reinvested:
2016 – €3.06
2017 – €1.07
2018 – €8.30
2019 – €5.97
2020 – €1.22
Total Reinvested Dividends/Distributions: €19.62
Total Principal Paid in: €2,360 (€40 monthly payments)
Principal Investment (for time period 02/2016-12/2020): €2,379.62
Value of mutual fund on 12/31/2020: €2,661.58.
Of course missing/not considered is current value of fund and €40*3 monthly payments already in 2021.
I’ve been reading up about PFIC ‘handling’ and know ‘excess distribution’ is an important distinction. I’m assuming based on what I’ve read that these distributions, even though small amounts, qualify (at least some do) as excess distributions. Because of this I am thinking I (unfortunately) do not qualify for the exception to file Form 8621 (the value being well under $25,000).
I understand there are 3 different tax schemes – Tax and Interest scheme; Qualified Electing funds; Mark to Market Schemes.
I have NOT accounted for it in my taxes since 2016 outside of listing the account on FBAR submissions. I mistakenly thought I would only have to account for it when I ‘sell’ the fund—the terms of the bank contract have the payout scheduled for 02/2023. I didn’t look closely enough at the yearly paperwork to even notice the tiny dividends paid out (reinvested). I always thought it was just an untouchable account and I would report capital gains at the end of 7 years (the contracted ‘savings period’ for the product).
At this point, I am seeking tax advice on the best way forward given my situation. I am more concerned with being compliant than any gains (or losses created due to this situation) from this small account, and understand there will be costs associated with ‘fixing’ this.
Thanks again for any assistance and feedback…