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Level 1
posted Aug 1, 2021 1:42:59 AM

Foreign retirement/pension plan

I am a US citizen currently working in S. Korea and have been enrolled in a defined contribution plan with my employer. If I end up quitting, the employer transfers the funds in the DC plan to an individual retirement account that I am required to open upon termination. 

 

Is the annual employer contribution taxable even though I have not taken any distributions yet and are the accrued capital gains and dividends taxable when I take the distributions? (then I would need to amend previous tax returns)

 

If so, is the employer contribution excludable under the foreign earned income exclusion?

 

If not, am I required to report the employer contributions, gains, and dividends altogether and pay taxes on them upon termination--when the funds are transferred to an individual retirement account?

0 2 670
2 Replies
Level 15
Aug 1, 2021 3:57:54 PM

If the DC is rolled into an IRA then you did not make a distribution so nothing is taxable.  To make sure nothing is taxable when you leave then make sure it is a trustee to trustee conversion ... do NOT touch the money yourself. 

Level 1
Aug 1, 2021 7:50:26 PM

Thank you so much for your answer. 

I heard that foreign retirement accounts could be treated differently from US retirement accounts and that tax deferrals may not be available for foreign retirement plans. I hope that's not true..