Malta Pension Plans

Classification A, no legitimate version. There is no compliant way to do this as it is marketed.

Sold as: "Malta pension plan", "treaty-based retirement scheme", "tax-free forever under Article 17"

The treaty protects a pension funded with cash out of a salary. It does not protect a container you dropped appreciated stock into.

The pitch

Contribute appreciated stock or business interests to a Maltese pension scheme with no earned-income limit and no contribution cap, let the plan sell them, and take distributions tax-free forever under Article 17 of the treaty.

What it costs you if it is wrong

Sec. 6707A if it were a listed transaction. Form 3520 and 3520-A failures up to 35 percent of the transfer and 5 percent of trust value annually. Form 8938 10,000 dollars per year. FBAR 10,000 dollars non-willful to 50 percent of balance willful.

Red flags

The contribution is appreciated stock rather than cash
There is no cap tied to earned income
You do not work in Malta and never have
Forms 3520, 8938, and the FBAR are not part of the plan

Questions to ask the person selling this

1Is the contribution cash, or appreciated property?
2Is there a cap tied to my earned income from personal services?
3Do I work in Malta?
4How does this survive the 2021 Competent Authority Agreement?
5Who files Forms 3520, 3520-A, 8938, and the FBAR?

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