Singapore to Close Non-Citizen/Permanent Resident CPF Accounts

Singapore to Close Non-Citizen/Permanent Resident CPF Accounts

It is very common for U.S. persons who previously lived and worked in Singapore to have a Central Provident Fund (CPF Account) in Singapore. The CPF is like a hybrid 401K/Social Security type of account in which it is funded through employment when the taxpayer works for a Singaporean employer. And, just because a taxpayer moves out of Singapore does not mean that they automatically lose the right to their CPF. But recently the Singaporean government provided that they would be closing the CPF accounts for taxpayers who are neither Singaporean citizens nor Singaporean permanent residents. Thus, for US persons who have CPF, this may have a tax implication in the United States. Let’s take a brief look at what the Singaporean government has stated about the closing of certain CPF accounts for certain account owners.

As provided by the Singaporean Government:

If you are not a Singapore Citizen or Permanent Resident before 1 March 2024

• • • You may close your CPF account and transfer your CPF savings to your bank account at any time.  If you do not do so by 31 March 2024, your CPF account will be automatically closed on 1 April 2024.”

If you renounced Singapore Citizenship or Permanent Residency from 1 March 2024 

• • • “You may close your CPF account and transfer your CPF savings to your bank account when your renunciation is completed, i.e. when you are not a Singapore Citizen or Permanent Resident. If you do not do so, your CPF account will be automatically closed in the month following your renunciation; i.e. if you are no longer a Singapore Citizen or Permanent Resident in March 2024, your account will be closed in April 2024.”

What happens when my CPF account is closed and I have yet to transfer my CPF savings to my bank account?

• • • Any remaining savings will stop earning the prevailing CPF interest. As a concession, these savings will earn the commercial Singapore bank interest rate until 31 March 2027. Thereafter, no interest will be paid. You may still transfer the remaining savings to your bank account, at any time.

    • Your participation in all the schemes administered by the CPF Board will also cease. Please refer to the section Schemes’ participation upon account closure for more information regarding schemes’ participation when your CPF account is closed.

    • Account Closure Q&A

U.S. Taxation and Reporting

For U.S. persons who have CPF, each year, they are required to report the account along with other foreign accounts on various IRS international information reporting forms provided by the IRS, such as the FBAR and Form 8938. In addition, taxpayers generally pay tax on the growth income generated in the CPF even though it was not distributed. Once the account closes, the concern becomes that would be the equivalent of a pension payout and therefore taxable on a US person’s tax return even if those funds are not transferred back to the United States, since the United States and Singapore do not have a tax treaty in place and so deferral options are typically not available.

Late Filing Penalties May be Reduced or Avoided

For Taxpayers who did not timely file their FBAR and other international information-related reporting forms, the IRS has developed many different offshore amnesty programs to assist taxpayers with safely getting into compliance. These programs may reduce or even eliminate international reporting penalties.

Current Year vs. Prior Year Non-Compliance

Once a taxpayer missed the tax and reporting (such as FBAR and FATCA) requirements for prior years, they will want to be careful before submitting their information to the IRS in the current year. That is because they may risk making a quiet disclosure if they just begin filing forward in the current year and/or mass filing previous year forms without doing so under one of the approved IRS offshore submission procedures. Before filing prior untimely foreign reporting forms, taxpayers should consider speaking with a Board-Certified Tax Law Specialist who specializes exclusively in these types of offshore disclosure matters.

Avoid False Offshore Disclosure Submissions (Willful vs Non-Willful)

In recent years, the IRS has increased the level of scrutiny for certain streamlined procedure submissions. When a person is non-willful, they have an excellent chance of making a successful submission to Streamlined Procedures. If they are willful, they would submit to the IRS Voluntary Disclosure Program instead. But, if a willful Taxpayer submits an intentionally false narrative under the Streamlined Procedures (and gets caught), they may become subject to significant fines and penalties. 

Need Help Finding an Experienced Offshore Tax Attorney?

When it comes to hiring an experienced international tax attorney to represent you for unreported foreign and offshore account reporting, it can become overwhelming for taxpayers trying to trek through all the false information and nonsense they will find in their online research. There are only a handful of attorneys worldwide who are Board-Certified Tax Specialists and who specialize exclusively in offshore disclosure and international tax amnesty reporting. 

Golding & Golding: About Our International Tax Law Firm

Golding & Golding specializes exclusively in international tax, specifically IRS offshore disclosure. 

Contact our firm today for assistance.