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Tyrone J. Taylor
Tyrone J. Taylor, Enrolled Agent
Category: Tax
Satisfied Customers: 52
Experience:  Owner at Taylor Tax and Financial Consulting
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I am a US permanent resident working on my 2015 tax return.

Customer Question

Hi,
I am a US permanent resident working on my 2015 tax return. Some time ago, I worked for a few months in Malaysia. As a result, I have a retirement savings account run by the Malaysian government (Employees Provident Fund). It is a compulsory savings plan similar in concept to Singapore's CPF. Similar to the US 401(k), withdrawals are not permitted until age 50 except under certain situations.
My question is: Are dividends earned under this account reportable as income in Form 1040--even if no distributions are taken? If so, should they be reported as interest, dividends, or under another category?
Thank you.
Submitted: 1 month ago.
Category: Tax
Expert:  Tyrone J. Taylor replied 1 month ago.

Good afternoon,

My name is***** and I am an Enrolled Agent, licensed to represent taxpayers in front of the IRS. I have 10 year experience handling a variety of tax preparation and tax resolution issues.

I do know that your answer depends upon if Malaysia has a treaty with the US in regards ***** ***** their plan as a qualified retirement plan. If you can give me a few minutes, I will review that information and get back to you.

Customer: replied 1 month ago.
Sounds good. I believe Malaysia does not have a tax treaty with the US. Will await your further guidance.
Customer: replied 1 month ago.
Also, just to clarify, contributions to the retirement account are a combination of employer and employee contributions. Thank you.
Expert:  Tyrone J. Taylor replied 1 month ago.

Hello Customer,

From the information I have gathered, in order for the income to be considered "qualified" under Sec 401 of the IRC (Internal Revenue Code), the qualified plan must be created or organized in the US. Or, there must be a treaty between the country that has the retirement account and the US that allows the US to recognize the retirement account as a qualified plan. Since Malaysia does not have a tax treaty with the US, then unfortunately, the dividends will have to be reported as non-deferred income.

I'm sorry I was not able to provide you with more positive news. Thank you for allowing us to assist you with your question. If you have any follow-up questions, please let me know. If not, please feel free to go ahead and rate my question. Thank you, ***** ***** a good day.

Customer: replied 1 month ago.
Thank you, ***** ***** what specific location would I report this non-deferred income in my 1040?
Expert:  Tyrone J. Taylor replied 1 month ago.

Good morning,

The income from this plan should be reported under Line 16a and 16b on the 1040 Tax Return. Please refer to the instructions for the 1040 that describes that all worldwide income is reported on that line.

http://www.irs.gov/pub/irs-pdf/i1040gi.pdf page 21