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Date: Fri, 16 Apr 2004 08:36:16 -0700
X-Mailer: Microsoft Outlook Express 6.00.2800.1106
I am a Swiss-American who is primarily based in USA, but I worked in
Munich, Germany for almost 8 years. The dumbest thing I did was when I
was in Germany I interrupted my yearly retirement savings in USA and
instead put money into the German system. What I should have done is to
open an IRA such as a Roth-IRA and contributed max into the US system on
my own, in parallel with the German system. The way I did it, I have a
7-year gap in my US retirement savings that can't be undone now. I also
lost out on compounded interest during that whole time. During that
time, I didn't have any spectacular investment returns on any post-tax
money that would justify not putting into retirement savings.
The sad truth is that such basic principles as retirement planning are
not taught in the schools and typically many citizens are not focused on
thinking about their retirement when young .. just at the time it is the
best for them to start and to learn how to plan for retirement. It's
also in the gov't best interest to teach our young, otherwise the poor
retired masses will drain out the countries resources later. It seems
it would be in everyone's best interest that people retire rich instead
of poor.
Now I have my retirement investments split between 2 country systems,
neither of which would perform as well as if I had kept at least one of
them uninterrupted.
The companies I worked for also didn't go out of their way to educate
their employees about this ... it's left up to the individual to inform
themselves.
We ex-pats have a special case because there aren't a lot of experts who
are well versed in ex-pat situations ... except other ex-pats who have
experienced it themselves ... but often those ex-pats aren't CPAs or tax
lawyers ... they are engineers or scientists that focus on other topics
of interest in their daily lives. The avent of Internet and email is a
real God-send to those of us in this community. Too bad it wasn't
ubiquitous when I was in Germany as it is today.
-chris
----- Original Message -----
From: Sven Feldmann
To: Swiss_list
Sent: Thursday, April 15, 2004 4:02 PM
Subject: swiss-list: How about retirement accounts?
After the hearty discussion of AVS and SS, let me
raise a related point and see what the consensus (or
range of opinions) is within the SwissList community.
Since we all just filed taxes (hopefully before
midnight tonight!), it occurred to me that IRA or
supplemental contributions to a 401(k) plan, which are
an important tax savings device for US tax payers, are
a double-edged sword for expats (even for long term
expats). On the one hand they allow you to defer
current taxes and to benefit from compound interest on
pretax income; on the other hand these tax-deferred
savings cannot be transferred back to Switzerland
before age 59-1/2 without a 10% tax penalty. I am not
sure if such IRA or 401(k) savings can be transferred
to a restricted savings plan in Switzerland, such as a
pension plan or "3rd pillar" vehicle.
So what are the opinions out there: should one max out
on supplemental contributions up to the maximal
allowable limits (recently raised under the Bush tax
laws)? Can these savings be transferred to "buy into"
Swiss (defined benefit) pension plans without penalty?
Can one keep these tax-deferred vehicles while living
abroad until they become unrestricted at age 59.5
without running the risk of confiscatory taxes along
the way or upon retirement? -- Your considered
opinion is welcome (though it's too late for this
year's tax planning...
-Sven
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Received on Sun Apr 18 2004 - 16:48:50 PDT
