US expat tax filing and German pension funds

21 posts in this topic

On 2/5/2018, 8:03:16, skillfulpartridge said:

For whoever's interested, here's what I learned so far (unfortunately not much and nothing conclusive). I guess this will be old hat for most of you. Just to be clear, the point of my original post was not only to find out if I could deduct any contributions to my private pension fund from my income for US tax purposes, but also and most importantly to figure out what information return filing requirements are necessitated by my private german pension scheme. I found out that my private pension fund may be categorized as a PFIC (Passive foreign investment company)...or maybe a trust, but not sure yet.


@starshollow already referenced an article about PFICs here


had I only read this in my early 20s when I set up the account (more than 15 years ago!)...or at least have been able to see into the future!


I also found this one on treatment of foreign pensions as PFICs helpful.


Anyways, I am now seeking an accountant's help on this specific issue. While waiting, I was wondering if anyone might be able to give me some pointers, i.e. on how to tell definitively whether my pension is a trust or a PFIC?


It says a company is a PFIC if it meets one of the following 2 rules:

  1. Income Test–75% or more of its gross income come from passive investments
  2. Asset Test–at least 50% of the average assets held are producing passive income

How would you go about finding out if the company that manages a pension meets these criteria?


Also,could it be that the German/US tax treaty (Article 18A, Paragraph 5, a) bb) would allow exclusion of the pension fund's growth from tax and hence I could avoid the necessity of filing out the information return e.g. 8621 for PFICs? Article 18A, Paragraph 5, a) bb says:

"any benefits accrued under the pension plan, or contributions made to the pension plan by or on behalf of the individual’s employer, during that period or attributable to that period, and that are attributable to the employment, shall not be treated as part of the employee’s taxable income in computing his taxable income in the United States."


Furthermore, does anyone have any idea if I should expect the accountant to have to fill in more than one form 8621 for a pension scheme such as I have described in my original post?


In Trying to understand this better, I think this article is a little easier to digest. I can't say I really will understand it all, and like others are saying, ultimately we just cant invest outside the US. Its too much, they will just continue to discourage it.


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