Description
Two of the most common assets of a client, the individual retirement account and the mutual fund, create issues when inherited by non-US persons. A U.S. fund in a European heir’s hands runs into that country’s punitive treatment of a non-compliant foreign fund and, increasingly, into a distribution rule that stops the heir’s bank from holding it at all; a European fund in an American’s hands is a passive foreign investment company. This session is the one a financial advisor can easily act on, by reviewing beneficiary designations.
Date: Oct 16, 2026
Time: 2:00 pm ET
| Audience | Financial advisors and wealth managers in particular; CPAs, trust officers and estate attorneys |
| Language | English |
| Knowledge level | Intermediate to advanced |
| Field of study | Taxes / Specialized Knowledge |
| Prerequisites | None. Advance preparation: none. |
| Format | Live web conference, group internet based — 50 minutes of instruction, 10 minutes of Q&A |
| Credit | 60 minutes; 1.0 credit hour to be requested from CFP Board, NASBA/CPE and state CLE boards |
Learning objectives
- Determine the U.S. withholding treatment of individual retirement account and qualified plan distributions to a nonresident beneficiary, and apply the relevant treaty pension and annuity article.
- Apply the ten-year rule and the eligible-designated-beneficiary categories to a beneficiary resident abroad, including the interaction with a foreign tax year.
- Explain how Germany, France, Switzerland, Austria, Italy, Belgium and the United Kingdom tax a distribution from a U.S. retirement account.
- Identify the fund problem running in both directions: U.S. funds held or inherited abroad, and non-U.S. funds held by a U.S. person as passive foreign investment companies.
- Redesign beneficiary designations and account composition before death rather than attempting remediation afterwards.
Case studies:
- A USD 2.4 million individual retirement account left equally to two children, one in Chicago and one in Munich. Identical documents; the Munich child nets materially less, and pays for years longer.
- An index-fund portfolio inherited by a United Kingdom resident, where non-reporting fund status converts the entire gain into income taxed at the top marginal rate.
- A French heir who cannot open an account that will accept the inherited U.S. fund, and cannot sell it without an account.
Sample questions that will be answered:
- Can a foreign surviving spouse do a spousal rollover?
- Does the ten-year rule run in the U.S. or in the foreign tax year?
- Can a U.S. custodian be required to keep the account open for a foreign heir?
- Is thirty per cent withholding recoverable by filing Form 1040-NR?
Participant handouts:
- A seven-country matrix of retirement-account and fund treatment;
- A beneficiary-designation review checklist;
- A short client letter template for raising the question with families whose children live abroad.
