Taxation of IRA and Roth IRA
September 7, 2013 | 35,00 EUR | answered by Anton Pernitschka
I currently live in the USA and am considering moving to Germany. I have regular IRAs and Roth IRAs here. I plan to retire in Germany and withdraw the money in retirement. When will these accounts be taxed in Germany? I assume the regular IRA will only be taxed upon retirement (under Article 18A). However, how will the Roth 401K be taxed, since I have already paid taxes in the USA? Will I have to pay taxes again in Germany?
Dear questioner,
In the context of an initial consultation and your fee commitment, in compliance with the regulations of this forum, I would like to answer your question.
Under the pension scheme as defined in Article 18 of the Double Taxation Agreement (DBA) between Germany and the USA, examples include pension plans in accordance with sections 401(a), 408(k) IRA. However, Roth IRAs are excluded.
Section 401k represents a further specificity compared to the definition in section 401a, so that generally Article 18 of the DBA is applicable. However, according to section 401k (1), this may not necessarily be the case. Therefore, a confirmation (from the employer or IRS) should be obtained that the pension plan meets the requirements of section 401a, unless these requirements are evident from the contract documents.
Based on the facts, it could be assumed that if "taxes have already been paid in the USA", the pension has already been paid out and thus dissolved. However, if there are still future inflows in Germany, relevant taxation could occur in Germany according to the relevant articles of the DBA.
Kind regards,
Anton Pernitschka
