Swiss Bank Accounts and Pillar 2/3 Pensions: IRS Reporting

Switzerland's pension system has three "pillars" — mandatory state pension (AHV/AVS), mandatory occupational pension (BVG/LPP, called Pillar 2), and voluntary private pension savings (Pillar 3a and 3b). Pillar 2 occupational pensions are funded by mandatory employer and employee contributions and may receive partial treaty protection under the US-Switzerland tax treaty's pension article, though the treaty's interaction with Swiss pension law is complex. Pillar 3a accounts are similar to IRAs and may receive some deferral treatment under the treaty for US persons who make the appropriate election. Pillar 3b accounts (private savings) receive no special US tax treatment and are treated as ordinary taxable savings. All Swiss bank and pension accounts must be reported on FBAR given Switzerland's historically high account balances, and Swiss accounts above the thresholds are reportable on Form 8938. Swiss banks were early targets of US enforcement under FATCA, making Swiss account holders one of the most scrutinized groups in IRS offshore enforcement.