Malta Pension Plan Disputes in 2026: Lines Drawn, Questions Remaining

Taxpayers and the IRS have reached an impasse about the proper tax treatment of U.S. individuals participating in Malta pension plans.  On one hand, based on the express language of the treaty between the United States and Malta, some taxpayers have taken the position that they are entitled to various types of tax deferral and tax exclusion.  On the other hand, the IRS thinks that the treaty positions are incorrect and has carried out various actions in recent years to halt them.  This article by Partner Hale Sheppard explains the normal treatment of foreign retirement plans, relevant provisions in the treaty, positions claimed by taxpayers, actions by both sides to foster or stop treaty positions, and several open questions. 

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