Indian Provident Fund (EPF): FBAR, Form 8938 and US Tax

If you worked for an Indian employer before moving to the United States, you may still hold an Employees' Provident Fund (EPF) balance. Does it go on the FBAR or Form 8938? Is it taxed here while it grows? What happens when you withdraw?

As of October 2026 we found no guidance on Indian EPF by name from the IRS, FinCEN or the Illinois Department of Revenue. Many answers below are therefore positions to settle with a CPA, not settled rules.

What an EPF account is and what changed in India

EPF is India's mandatory provident fund for covered salaried employees. The employee contributes 12 percent of wages and the employer usually matches it, though 8.33 percent of wages (up to the ceiling) from the employer's 12 percent goes to a separate pension account (EPS). Interest is declared yearly: 8.25 percent for fiscal year 2024-25, with the same rate recommended for 2025-26. Each account has a permanent Universal Account Number (UAN) and an annual statement.

The U.S. has no totalization agreement with India; the Social Security Administration's list omits it as of October 2026.

Do I have to report it in the United States?

You may hear that EPF is "FATCA exempt." The India-US FATCA agreement treats a qualifying provident fund as a non-reporting Indian institution, but that relieves India's reporting, not your duty. Indian mutual funds follow separate PFIC rules.

Question 1: Is it an FBAR account?

The FBAR (FinCEN Form 114) is due when your foreign accounts together exceeded $10,000 at any time in calendar year 2025. Its retirement-plan exception covers only U.S. plans: 401(a), 403(a) and 403(b) plans and IRAs. The IRS manual (August 2025) says foreign plans, such as a Canadian RRSP or a Mexican AFORE, are normally reportable. It does not name EPF.

Unsettled: whether the EPF Organisation counts as a financial institution here.

Penalty: non-willful up to $16,536 per report, willful the greater of $165,353 or 50 percent of the balance (January 2025 figures). See FBAR penalties.

Careful filers usually report it at the highest balance of the year, converted at the Treasury rate for December 31, and count it toward the $10,000 test. See our FBAR page.

Question 2: Is it a Form 8938 asset?

The Form 8938 instructions treat an interest in a foreign pension plan as one asset, valued at year-end fair market value (or, if that is not readily known, the year's distributions or zero). The FATCA retirement exclusions do not apply, and the foreign social security exclusion does not cover pension plan interests. For tax year 2025 a single U.S. filer files above $50,000 at year-end or $75,000 at any time (thresholds).

Unsettled: whether any part of EPF or EPS counts as social security.

Penalty (current instructions): $10,000, plus up to $50,000 more after IRS notice. See Form 8938 penalties.

Careful filers treat EPF as a foreign pension plan interest and report it once the total passes the threshold.

Question 3: Do Forms 3520 and 3520-A apply?

Revenue Procedure 2020-17 lets eligible individuals skip these foreign-trust forms for a "tax-favored foreign retirement trust." Conditions include annual reporting to local tax authorities, withdrawals tied to retirement age, disability or death (or penalized if early), and nondiscrimination if employer-run.

Unsettled: the IRS has not said whether EPF qualifies. Open points include whether it is a foreign trust and whether it meets the reporting, withdrawal and nondiscrimination conditions. The exemption does not change FBAR or Form 8938 duties.

Penalty (instructions revised December 2025): Form 3520, the greater of $10,000 or 35 percent of the gross value of transfers or distributions. Form 3520-A, the greater of $10,000 or 5 percent of the owned trust assets. See Form 3520 penalties.

Careful filers have the CPA decide and document this before the first withdrawal.

Is it taxed in the U.S. while it grows?

Reporting and taxing are separate questions. Both arise for years in which you were a U.S. citizen or resident.

The 402(b) position. A funded foreign plan not exempt under Internal Revenue Code section 501(a) is generally analyzed under section 402(b): employer contributions are included in income as they vest, distributions are taxed under section 72, and amounts already included raise your basis. Applying this to EPF is professional reasoning, not an IRS ruling. A more cautious position reports credited interest yearly. Choose one with your CPA and stay consistent.

The treaty. Article 20(1) of the 1989 US-India treaty taxes private pensions only where you reside, but Article 20(3) defines "pension" as a periodic payment, and the Technical Explanation puts lump sums under Article 23 (Other Income). Whether EPF or EPS is a public pension or social security benefit under Article 20(2) is unsettled. No article lets a U.S. person deduct Indian plan contributions. A treaty position generally needs Form 8833 ($1,000 penalty if missed). See the treaty page.

Foreign tax credit. The credit covers only foreign income tax you legally and actually owe, so tax deducted at source counts only to the extent it is your final Indian tax. Under the Income-tax Act, 2025 (in force April 1, 2026), India generally leaves a withdrawal out of income after five or more years of continuous service; shorter service can make it taxable. We found no official guidance on non-resident rates, so ask your Indian CA. See foreign tax credit.

Exchange rates. The FBAR uses the Treasury rate for December 31. Income and the credit may use the IRS yearly average or another posted rate used consistently. The 2025 average was INR 87.133 per dollar.

Three illustrations

Invented examples.

Meera (H-1B, single) has $4,000 in an NRE account and EPF worth about $7,000 on December 31, 2025. If she treats the EPF as reportable, the total passes $10,000 and she files an FBAR. Form 8938 is not triggered.

Rahul and Anita (green cards, joint return) hold EPF worth $85,000 and $30,000 in other Indian accounts at year-end 2025. The $115,000 total passes the $100,000 joint threshold, so Form 8938 applies along with the FBAR.

Naveen (U.S. citizen, home from a two-year posting in India) plans a 2027 withdrawal. With two years of service it may be taxable in India, so he gets the final tax figures from his Indian CA before claiming a U.S. credit.

Before you withdraw or file: a checklist

1. Gather records. Your UAN and annual statements for every old employer, kept five years.
2. Settle your positions on the FBAR, Form 8938 and Forms 3520 and 3520-A in writing, and count every account in each threshold test.
3. Check KYC. The Scheme expects Aadhaar, PAN, UAN and an Aadhaar-seeded Indian bank account, which receives the payment.
4. Choose the withdrawal date deliberately. You are a U.S. resident only from your residency starting date, so withdrawal date against arrival date can matter; citizens and green card holders are already taxed as U.S. persons. Indian timing rules matter too.
5. Collect Indian tax records for any credit, and watch the 36-month clock after permanent migration.

If you missed earlier years

The IRS has procedures for non-willful failures. They need a truthful certification and close once an examination starts, so talk to a CPA first. See unfiled tax returns and reasonable cause relief.

• Late FBARs. If you are not under examination or contacted, file electronically with a reason. The IRS manual says no penalty applies where the failure was non-willful, had reasonable cause and the accounts are properly reported.
• Streamlined Domestic Offshore. For people living in the U.S.: three years of returns with information returns, six years of FBARs, tax and interest, Form 14654 and a penalty of 5 percent of the highest aggregate balance of the foreign assets (IRS, July 2026).
• Late Forms 3520 and 3520-A. File with a reasonable-cause statement. Penalties may still apply.

Illinois

Illinois starts from federal adjusted gross income. Its retirement subtraction covers federally taxed Social Security, government plans, IRAs and qualified plans tied to Internal Revenue Code sections 402 to 408. We found no Illinois statement on foreign plans, so do not assume it applies. See Illinois.

How we can help

We prepare the U.S. side: documenting your position, preparing the forms and the foreign tax credit, and coordinating with your Indian CA, who handles Indian filings. See international tax services and Indian CPA vs Indian CA.

Frequently asked questions

General information only, not tax, legal or accounting advice for your situation. Rules, limits and deadlines change; confirm the current rules with the official source or a qualified professional before you act. Reading this page does not create a professional relationship with CPA Tax Payroll and Accounting Corp.