>
Date: Sun, 7 Oct 2007 13:14:27 +0200
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> Dear Listmembers,
>
> I am a Swiss citizen, 29 years old and I moved to the US three years
> ago. I am fully employed here and I contribute to a 401k and a Roth
> IRA.
> I now would like to know what happens to my retirement accounts when
> I move back to Europe (most likely Switzerland) in 5 to 10 years:
>
> - Can I keep the accounts? Should I roll them over into something
> else?
Yes on the Roth IRA, it depends on the 401k. Some companies (like my
former employer) pays for the 401k, so I kept it there until now, but
you can roll it over into a traditional IRA. Problem with both is,
that you are subject to currency risk if you retire outside the US,
should not be a big tax-risk for CH, but check with a professional.
> - How does it work with taxes? Do I get hit twice?
You should not, since there is a tax-accord between CH and USA, but
speak to a professional about that.
> - Knowing that I will be leaving the US in a few years, what would be
> the smartest way to invest for my retirement? Should I ignore them
> all together (besides the company's matching contribution) and invest
> in tax optimized index funds?
That depends a little bit on your situation, by your description you
are getting your salary in the US, and are a resident for tax
purposes (U.S. person), so it's a little bit tricky. I'd suggest to
invest in a qualified fund for individual retirement benefits in
Switzerland (3eme pilier, 3. Säule), I'm not sure if this is tax-
deductible in the US, probably not, but if you can spare the money it
might be a good way to get you started.
> - Should I build up a portfolio in Switzerland instead (and paying
> the currency exchange rate)? There seems to be no "Swiss Vanguard"
> out there. Where can I find low cost index funds?
This might be a good, idea since a) you get rid of the currency risk
and b) the dollar shows no sign of getting stronger anytime soon.
Also the swiss stock market is currently very attractive, and even
when it was not, the gains due to the deprecation of the dollar made
up for it!
Please note, that there are lots of hurdles for US residents, like
most funds you cannot legally acquire, theoretically most electronic
platforms should not be accessible to you. The UBS SMI fund
prospectus for example says "This Product may not be sold or offered
within the United States or to U.S. persons "
See http://www.cash.ch/ for a lot of links for fonds providers,
trading platforms and more.
> - I have not been contributing to the AHV for 2 years since I am
> doing so for social security instead. Was that a mistake, i.e. should
> I resume payments if possible?
I'd say no, since it is very expensive, I'm not sure if it's tax
deductible, in most cases the loss is not worth it, plus are you sure
that you will ever get money from the AHV? Contact the swiss embassy,
they have people who can give you very good guidelines on how much it
costs, and how much you loose if you don't, at least that used to be
the case.
Also there is an accord between CH and US regarding social security.
Technically if you make enough qualified contributions to social
security, you can claim those, even if you are in CH. How it works
exactly I don't know (since I don't qualify I don't care), but see
the archives of this list for some details on it. Like
http://www.swiss-list.com/mailing/swiss-list/2002/0422.shtml
>
> In order to get solid answers to these questions, who would be the
> person to talk to? A fee based financial adviser specialized in
> international tax law? Where would I find such a person?
>
> I talked to the tax officials in Switzerland (department for
> international taxation and double taxation), but they were not able
> to give me a clear answer at all.
>
> I am hesitating to put more money in my retirement accounts even
> though I can afford it, because of all these uncertainties. And this
> is for sure not the smartest move...
>
Check the archives of the lists for some references on specialized
tax advisors/attorneys.
Cheers,
-daniel
Received on Tue Oct 09 2007 - 10:37:38 PDT
