I am from third country (US) and leaving Switzerland next month so will cash out my pension, but can't figure out whether my timeline is leaving enough buffer to get everything done. My employer is flexible on my end date so I can pick whenever I like.
This is my ideal timeline:
- Deregister today Feb 14, giving departure date of March 14th.
- Give notice that last day of work as March 7th.
- Mail (A post) form completed/notarized form to pensionkasse tomorrow, Feb 15.
The main question is: is one week between end date and departure from CH cutting it too close even if they receive the request several weeks in advance? I obviously don't want to get into the situation of paying extra taxes in the US because I left before I could withdraw my pension. Secondary clarification is that in order to avoid US tax on pension cash out, I only need to withdraw it while a resident in CH, correct? At that point it can sit in my CH bank account for some period—it's not the case that I also need to transfer the money back to the US before leaving?
Do you have a US passport? If so you already owe US tax from the point of any contributions into your pillar 2, both your part and employers. US doesn't recognize swiss pillar 2 as tax deferred, they look more like normal bank accounts to IRS, any money earned and deposited there is income in US tax sense and needed to be taxed in the year when you earned it
If you were paying your US taxes like you should have, you'd have already established some non-zero US tax basis for your pillar 2, possibly the full value of it considering how pathetically little interest swiss pension funds tend to pay. And then on withdrawal you'd only need to pay extra US taxes on the difference - appreciation of its value that wasn't yet taxed by US. Whether you withdraw as a CH resident or not makes no difference to US taxes, only to swiss side taxes.
Yes I have a US passport. Are you implying that it is still a benefit to withdrawal while a CH resident for Swiss side taxes then? Or there is no difference?
I'm implying that you're a filthy tax evader, mister, if you weren't paying your US taxes due on time. Seek professional US tax advice and beg IRS for forgivance of your sins...
For swiss taxes it's more beneficial to park the money in SZ first, then withdraw it from there as a non-resident. But you should be a lot more concerned about US tax side as the swiss taxes you should be able to claim as a tax credit if not outright refunded.
I've been paying all US and CH taxes, thanks. Consider getting a life rather than sending rude, presumptuous messages to people simply looking for (legal) advice in a complex foreign system.
To start with you can’t assume the dates will work out as you expect. It could take several months before the pension fund completes the process needed to transfer the lumps sum in to a blocked account. And furthermore you are going to have to prove you are none resident to a third country before the process can begin.
Well then you wouldn't have the questions you raised in your top post in the first place
As a US person, you should've been declaring your and your employers' pillar 2 contributions to IRS every year as income already, did you? There wouldn't be any extra US taxes on withdrawal assuming everything you put into the account got properly taxed.
I'm doing much better than you trying to defraud IRS, thanks. All tax obligations paid with plenty of money left for a happy life
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