@vsun ,
(a) Yes I see that a NZ employee/participant whom has move to another country ( not Australia) and after 1 year minimum of being abroad can withdraw the savings in the program My ref -- Getting my KiwiSaver savings when I move overseas. Further ref . is -- KiwiSaver Act 2006 No 40 (as at 01 July 2025), Public Act – New Zealand Legislation.
(b) Based on the above , if you use the lump-sum distribution, your amount should consist of already taxed amounts ( employer contribution plus that of the employee) PLUS growth over the years ( and un taxed by NZ). My impression is that this "growth" amount is not taxed when distributed ( post superannuation for sure ). I am unsure of whether this growth is taxed if distribution occurs because the employee/ citizen is no longer a NZ resident.
(c) As I said earlier, if you do proceed with the early distribution, then for the US return you have to use a dummy 1099-R mechanism showing the total distribution received , and the growth portion as taxable. This would mean US will tax you on that grwoth ONLY. Please keep good records to show how you computed the "taxable " portion of the distribution.
(d) The tax treaty between US and NZ, has no direct reference to Kiwisaver under pension/annuity . However, there is small ref. about all incomes not directly ref'd in the treaty ( but under the general heading of income) can be taxed by the country of residence. Thus US will tax this income.
(e) Since the taxation of the contributions took place prior to your wife moving to US ( and coming under US tax regs. ), those taxes are NOT eligible for Foreign Tax Credit ( double taxation avoidance ). However if NZ taxes the growth in the Kiwisaver account then that tax will be eligible for FTC .
If this has answered your query , please mark this as accepted ( and thereby close this thread) or please tell me what more I can do in that regard .
pk
