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Treasury rule to require tax withholding on pensions paid to foreign addresses starting 2026, attorney says
Summary
Board attorney Sean Sundra told trustees a Treasury regulation effective 01/01/2026 will require tax withholding on pension distributions paid to foreign addresses or foreign financial institutions, with limited exceptions for military and diplomatic addresses.
Sean Sundra briefed the board on an administrative Treasury rule that will take effect on 01/01/2026 and said it will require taxes to be withheld from pension distributions when retirees receive payments at a foreign address or through a foreign financial institution. "It takes effect on 01/01/2026," Sundra said, and he described limited exceptions for military and diplomatic addresses.
Sundra said the regulation will not require immediate action by the board this year but that trustees should be aware of the change because it will affect retirees who live overseas beginning in 2026. He offered to assist with communications or implementation steps if the plan has retirees with foreign addresses.
