iDeCo and US citizens

[RetireJapan]

It seems the situation for iDeCo and US citizens is MUCH more nuanced than I had understood so far

This Reddit thread is a good overview: https://www.reddit.com/r/JapanFinance/c ... and_ideco/

TLDR: it may be possible for US citizens to use iDeCo to invest without submitting PFIC paperwork. This would depend on a favourable interpretation of the US-Japan tax treaty, which is not clear on this issue.

We put some links in the US citizen page on the RetireJapan site (courtesy of Reddit's u/Starkimpossibility): https://www.retirejapan.com/us-citizens ... d-holders/

I'm hoping to do a video with the US CPA in question soon so hopefully that will provide more information.

[Gulliver]

It seems the situation for iDeCo and US citizens is MUCH more nuanced than I had understood so far

This Reddit thread is a good overview: https://www.reddit.com/r/JapanFinance/c ... and_ideco/

TLDR: it may be possible for US citizens to use iDeCo to invest without submitting PFIC paperwork. This would depend on a favourable interpretation of the US-Japan tax treaty, which is not clear on this issue.

We put some links in the US citizen page on the RetireJapan site (courtesy of Reddit's u/Starkimpossibility): https://www.retirejapan.com/us-citizens ... d-holders/

I'm hoping to do a video with the US CPA in question soon so hopefully that will provide more information.

So if I’m reading this correctly, it’s not necessary to report your iDeCo on an IRS tax return until you start making withdrawals?

[RetireJapan]

So if I’m reading this correctly, it’s not necessary to report your iDeCo on an IRS tax return until you start making withdrawals?

If that interpretation is correct, that may be true. It appears to be unclear until the IRS comments on it.

[TJKansai]

Potentially good info. I hope you learn more and give us the green light...

I have an iDeCo but can only contribute ¥12,000 a month.
It is such a piddling amount that I am not worried about any PFIC issues.

The NISA situation has much more potential, especially with the coming increases in allowance. The fact that Americans living in Japan can't actually have a substantial retirement account in either country that accrues tax-free is really unfair, and needs to be fixed (IMHO).

I do wonder just how many PFIC penalties are handed out to people in our shoes...my gut feeling is we are too few and the amounts too small for the IRS to worry about.

[DudeInJapan]

Just wondering if anyone has any updates on this??

[cherry1]

I’m also keen to know if there are any updates on this.

[captainspoke]

...
I do wonder just how many PFIC penalties are handed out to people in our shoes...my gut feeling is we are too few and the amounts too small for the IRS to worry about.

If the reports about the time/difficulty/money required to correctly file are accurate, the IRS probably sees checking such a tax return as a waste of time and manpower.

[Darren]

Do we have any updates on this issue?

[RetireJapan]

Long very technical discussion on here, with the end result that the only person arguing that iDeCo is fine kind of gave up.

https://www.reddit.com/r/JapanFinance/c ... and_ideco/

So as far as I am concerned it is still a grey area.

Shame, I would love to be able to refer people to official guidance.

[TokyoWart]

Long very technical discussion on here, with the end result that the only person arguing that iDeCo is fine kind of gave up.

https://www.reddit.com/r/JapanFinance/c ... and_ideco/

So as far as I am concerned it is still a grey area.

Shame, I would love to be able to refer people to official guidance.

Thanks again for following this for us US expats. I'm old enough that iDeCo doesn't matter for me but it would be a shame if US expats can't use it.