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Old 01.02.2018, 22:48
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Moving to the US - Taxation of lump-sum AVS/LPP etc

Hi,

my wife and I are contemplating a relocation to the US. We'd permanently leave Switzerland. Both of us have EU member states passports and are not CH nor US citizens.

I need to decide whether to cash out all or some of my 3 pillars, and understand the tax implications of doing so:
- if we choose to cash them out, what taxes apply in the US and are there ways to minimize them ? Knowing that we would not use the money but put in on a savings plan of some sort until retirement. Rollover to a 401k : possible ? For the sake of argument let's assume the gross cashable amount is 1Mio CHF - how much of that would go to the IRS ? Another question is further taxation after we've put the money to work: would income and capital gains be taxed ?
- if we don't, then we have to bet on the stability of Switzerland so that, when we reach retirement age, the money is still there to be used and we're not denied access to it. What taxation would apply to pensions paid by Switzerland to a US resident ?

Last but not least if you feel like recommending a competent tax attorney in the Geneva / Nyon area who could helps us in this domain, please do so !

Thanks
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Old 01.02.2018, 23:05
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Re: Moving to the US - Taxation of lump-sum AVS/LPP etc

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Both of us have EU member states passports
Then most likely you can't withdraw your 1st pillar, the discriminating factor is your passport.

Quote:
what taxes apply in the US
Income taxes

Quote:
For the sake of argument let's assume the gross cashable amount is 1Mio CHF - how much of that would go to the IRS ?
I believe the highest US income tax bracket is 37% this year and that's just federal taxes.

Quote:
and are there ways to minimize them
Withdraw everything & make sure it's fully paid out before you embark onto a plane heading into the US. Then you should get off lightly with only owing much smaller swiss taxes

Quote:
Another question is further taxation after we've put the money to work: would income and capital gains be taxed ?
Yes

Quote:
- if we don't, then we have to bet on the stability of Switzerland so that, when we reach retirement age, the money is still there to be used and we're not denied access to it. What taxation would apply to pensions paid by Switzerland to a US resident ?
Income taxes

Quote:
- if we don't, then we have to bet on the stability of Switzerland so that, when we reach retirement age, the money is still there to be used and we're not denied access to it. What taxation would apply to pensions paid by Switzerland to a US resident ?
Hiding the money from IRS in swiss pillar 2/3 will do you nothing good, only problems, potentially big tax problems ("PFIC"), and everything is still fully taxable in the US. I'd take everything that you can out and stick to the american equivalents: 401k's, IRAs

Quote:
Last but not least if you feel like recommending a competent tax attorney in the Geneva / Nyon area who could helps us in this domain, please do so !
I haven't used them personally, only saw (slides of) one of their talks and quite impressed, they seem to really know their stuff: white-lighthouse.com

Last edited by ivank; 01.02.2018 at 23:20.
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Old 23.04.2018, 22:04
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Re: Moving to the US - Taxation of lump-sum AVS/LPP etc

I'm not sure you'll avoid US taxes if you simply get the money out before entering the US. In the US you pay income taxes on your worldwide income, whether your a resident or not, so I assume all of the income from the year you move would be counted. They will give you credit for foreign taxes paid, but my US taxes are consistently higher than my Swiss taxes. You'll also owe state taxes, depending on the state you're moving to.

If you could withdraw the pension but then wait until the next calendar year to enter the US, you could probably avoid income taxes. I would definitely check that out with an expert, though.
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Old 30.04.2019, 09:14
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Re: Moving to the US - Taxation of lump-sum AVS/LPP etc

My husband and I (both UK citizens) are contemplating the same move. Hes got a C-permit which wed intend to freeze if Zurich canton allows us. Otherwise wed look to cash everything out as well like OP. Would be interested if anyone can recommend a tax attorney in Zurich area.
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