PPLI is blessed with simplified reporting duties of mainly the Form 8938 and with the FBAR.
In the past, we have received a significant number of calls, emails and faxes asking us for guidance on how to complete the FBAR, or the FinCEN’s Report 114 as it is now called. Therefore, we saw the service need to create a “tutorial” for our clients on how to complete the form in the context of PPLI.
Because we are not US CPA’s or tax experts, we have asked for guidance from one of the tax accountants we work with regularly to help produce the guidance below.
For this particular sample case, we contemplated a scenario where a US person is the policyholder of a PPLI, and only has one annuity or life policy (and no other ‘Foreign Account’) to report. Thus, in the tutorial below we will concentrate on parts I and II of the Form.
Parts III, IV and V may apply to you in certain circumstances. Please read the form instructions carefully if you think any of these sections may apply to you.
For Part II, we need to emphasize the point to please be sure to include the correct name and address of the insurance carrier that issued your policy, as well as the correct policy number. This information can generally be found on the policy certificate issued to you.
The reason why we need to stress this point is because with FATCA in place, it is critical that the information you provide in your FBAR can be matched with the information the government will receive from the insurance company (and from all other financial institutions for that matter). Thus, in order to avoid any question marks down the road, be sure to get this part right. Let us know if you need assistance with this information.
In preparation of completing the form, you will need to have handy a copy of your policy’s annual statement and a copy of your actual policy contract. Here we go:
2. Click “File an Individual FBAR” on the left side of the page.
3. Click on “Prepare FBAR”, and a PDF version of the FBAR will download on your computer. The PDF is fillable; it allows you to type information right into it and save.
4. Follow the instructions carefully and complete the information required in the form. If you are unsure what information you need to enter in a certain field, you can move the mouse/cursor over that field, hold it for a moment, and a box of text will pop up explaining what you need to enter. Be sure to save the document when you are finished.
5. Part I: Your would start by entering your filer information name, address, tax ID number, etc. Refer to the sections colored yellow.
6. If you are filing a PPLI policy as a sole owner, you would most likely need to complete the next page, Part II, as follows:
Line 15: Enter the maximum account value, as provided on your policy annual statement
Line 16: Open the pull-down menu and select “Other”. Next to it, write “Life insurance policy” if you own a PPLI life policy; OR “Annuity policy” if you own an annuity
Lines 17, 18, 19, 20, 21, 22 and 23: Get this information from your actual policy contract. Generally the information is on the first page. Note that BFI is NOT the insurer. it is very important that you provide correct information here. Contact us if you need assistance locating the information for these lines in your policy contract.
7. Once you reported your PPLI policy (and provided there are no other financial accounts you need to report), continue to page # 7, namely, the “Signatures” page and follow the instructions.
8. Once everything is filled out correctly, go back to the first page and carefully follow the instructions on how to digitally sign the document, save and validate it, and then finalize it for submission.
9. When you’re ready to submit the form, go back to the page from Step 3 and click the link to “Submit FBAR.” This will take you to the submission page, where you’ll need to enter some contact information and then upload the finalized FinCEN Form 114 PDF. After you have submitted it, the process is complete.
We hope this information has been useful. We have to reiterate that we are not US tax advisors or Certified Public Accountants and hence, for ultimate advice and instructions on the completion and filling of this form, we recommend that you check with your local tax person or CPA. Nevertheless, we hope this “tutorial” has been of service to you.