Go Back   English Forum Switzerland > Help & tips > Finance/banking/taxation  
Reply
 
Thread Tools Display Modes
  #1  
Old 09.09.2018, 02:12
Junior Member
 
Join Date: Mar 2015
Location: Biel
Posts: 50
Groaned at 6 Times in 3 Posts
Thanked 10 Times in 9 Posts
wpryan has made some interesting contributions
To stay or not to stay - Retirement planning

Hi All,

First of all, I understand that retirement planning is a complex issue and varies from person to person, so the aim of this thread is for me to better understand the variables in order for me to be better informed when I speak to the person who is responsible for managing my retirement account in the US.

I am a US citizen working in Switzerland. I will now finish my fourth year, and my employer is willing to keep me here until I say I will return. Even if I return, I would still work for the same employer. I am 56 years old. I like the lifestyle in Switzerland and I like my job - even if I'm not thrilled with the cost of living here. I am thinking to work here until retirement age and then move back to the US. Based on the retirement fund analysis, though, it may make more sense for me to move back to the US. I am curious, if I return, what will happen to my Swisscanto contributions? I heard that if all the funds are transferred to the US at once, the amount transferred is considered income, added to your salary and taxed. What if I leave the money here in Switzerland? I suppose I can still withdraw it from the US on a monthly basis, and I suppose it's still considered to be taxable when it gets to the US.

Another variable is that I lived in Florida and would return there. The amount of money I could contribute for retirement in the US would be more than I can contribute here. However, my employer contribution here brings the amount of savings to more or less the same as I would be able to save in the US.

I welcome any comments or advice.
Reply With Quote
This user would like to thank wpryan for this useful post:
  #2  
Old 09.09.2018, 03:47
Forum Legend
 
Join Date: Sep 2006
Location: SZ
Posts: 9,774
Groaned at 23 Times in 22 Posts
Thanked 21,788 Times in 6,987 Posts
meloncollie has a reputation beyond reputemeloncollie has a reputation beyond reputemeloncollie has a reputation beyond reputemeloncollie has a reputation beyond reputemeloncollie has a reputation beyond reputemeloncollie has a reputation beyond repute
Re: To stay or not to stay - Retirement planning

Caveat - I am not a tax pro, far, far from it. I am only a confused American worrying about retirement finances as well. So verify anything I say with a tax pro, as I could well have the wrong end of the stick.

Swiss Pillars 2 and 3 are considered non-qualified plans wrt US tax, and so are considered income in the year contributed. You should already be declaring and paying tax on those contributions, so when it comes time to take the money out, Uncle Sam shouldn't ask for a second cut.*

However, you have not yet paid Swiss tax on that amount, so that will be due when you withdraw. Unfortunately this is one instance where you are double taxed.

Leaving the money in Switzerland if you return to the US brings up the issue of non-resident Americans and account closures. Many Swiss banks do not do business with non-resident Americans - I don't know if this extends to parking a retirement account after you have left as well. Speak to yours to find out what their policy is. (Any US-returnees who can comment?)

A few more 'gotchas'. Research US Soc Sec Windfall Elimination Provision (WEP) and look into if, or how, having a foreign pension might affect your US Soc Sec. See here for an overview:
https://www.americansabroad.org/wind...ion-provision/

Also be aware of the Medicare late enrollment penalties, that is, failing to enroll at age 65. These penalties can raise your premiums significantly.
https://www.americansabroad.org/basic-medicare/

Not much of an issue if you do not plan to return to the US and thus do not need Medicare, but a rather big gotcha if you do plan to return or even simply can't rule returning out. Medicare does not cover you outside the US (except for specific border regions) so you are essentially paying for nothing for the years eligible while abroad. Nonetheless you have to begin paying at age 65 to avoid the penalty.

(Of course, Soc Sec and Medicare as we know them may not exist down the road...)

Both the links above are third party overviews - go to the relevant US government sites for official info.

---

We will return to the US when OH retires. While staying in Switzerland would likely put us in a financially disadvantageous position, finances are actually not the driving factor in that decision. We will leave because as non-citizens we feel a degree of vulnerability that could make our declining years difficult. YMMV.


*The above is how ours advises us to handle Pillars 2 and 3, you should of course consult your own tax guy.
Reply With Quote
The following 4 users would like to thank meloncollie for this useful post:
  #3  
Old 09.09.2018, 07:58
fatmanfilms's Avatar
Forum Legend
 
Join Date: Apr 2010
Location: Verbier
Posts: 17,984
Groaned at 286 Times in 235 Posts
Thanked 15,520 Times in 8,617 Posts
fatmanfilms has a reputation beyond reputefatmanfilms has a reputation beyond reputefatmanfilms has a reputation beyond reputefatmanfilms has a reputation beyond reputefatmanfilms has a reputation beyond reputefatmanfilms has a reputation beyond repute
Re: To stay or not to stay - Retirement planning

Quote:
View Post
However, you have not yet paid Swiss tax on that amount, so that will be due when you withdraw. Unfortunately this is one instance where you are double taxed.
Possibly not, the Swiss tax is a withholding tax, withholding tax is reclaimable via a DTA if you elect that it's taxable in the USA. As US tax has already been paid there should be little extra to pay. I would throw that through at your tax guy.
Reply With Quote
  #4  
Old 09.09.2018, 10:08
Forum Veteran
 
Join Date: Dec 2012
Location: Aargau
Posts: 2,153
Groaned at 11 Times in 10 Posts
Thanked 2,743 Times in 1,266 Posts
Mullhollander has a reputation beyond reputeMullhollander has a reputation beyond reputeMullhollander has a reputation beyond reputeMullhollander has a reputation beyond reputeMullhollander has a reputation beyond repute
Re: To stay or not to stay - Retirement planning

This link is to a KPMG presentation on US tax implications of the Novartis pension. It should answer some of the OP's questions on US and Swiss taxation of Swiss pension funds by US taxpayers:

https://www.pensionskassen-novartis....Population.pdf

Also, be sure to search EF for threads on US taxation of Swiss pensions.
Reply With Quote
The following 3 users would like to thank Mullhollander for this useful post:
  #5  
Old 09.09.2018, 10:32
robBob's Avatar
Forum Veteran
 
Join Date: Mar 2012
Location: Zurich
Posts: 1,953
Groaned at 37 Times in 24 Posts
Thanked 1,551 Times in 889 Posts
robBob has a reputation beyond reputerobBob has a reputation beyond reputerobBob has a reputation beyond reputerobBob has a reputation beyond repute
Re: To stay or not to stay - Retirement planning

Any contributions to 2nd or 3rd Pillar should already be taxed by the IRS.

Therefore on withdrawal only Swiss tax will incur on the deferred taxable income.
Reply With Quote
This user would like to thank robBob for this useful post:
  #6  
Old 09.09.2018, 12:54
Junior Member
 
Join Date: Mar 2015
Location: Biel
Posts: 50
Groaned at 6 Times in 3 Posts
Thanked 10 Times in 9 Posts
wpryan has made some interesting contributions
Re: To stay or not to stay - Retirement planning

That's a lot to chew on, but thanks for your input.
Reply With Quote
  #7  
Old 10.09.2018, 06:58
Member
 
Join Date: Oct 2011
Location: Aargau
Posts: 148
Groaned at 5 Times in 5 Posts
Thanked 111 Times in 46 Posts
Wisconsinite has no particular reputation at present
Re: To stay or not to stay - Retirement planning

Quote:
View Post
Any contributions to 2nd or 3rd Pillar should already be taxed by the IRS.

Therefore on withdrawal only Swiss tax will incur on the deferred taxable income.
Is this also true if one decides to take a lifetime pension from Pillar 2 instead of lump sum?
Reply With Quote
Reply




Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
stay here or move to UK real Daily life 28 31.03.2014 01:51
Not wanting to stay evianers Leaving Switzerland 20 03.09.2010 00:06
Stay Permanently in Switzerland or Not? esto Daily life 49 18.11.2009 16:20
Long weekend in Ticino - where to stay, what not to miss? saraCan Travel/day trips/free time 9 25.09.2009 10:02
Places to stay in Scuol or Livigno Harriet and Patrick Travel/day trips/free time 0 10.08.2009 14:46


All times are GMT +2. The time now is 12:13.


Powered by vBulletin® Version 3.8.4
Copyright ©2000 - 2019, Jelsoft Enterprises Ltd.
LinkBacks Enabled by vBSEO 3.1.0