US Expat Company DC Pension (確定拠出年金) Tax Liability

[yokaze]

My employer in Japan provides a company DC pension (確定拠出年金), to which any contributions can be managed with a variety of mutual funds or simple savings. However, I understand as a US citizen any foreign based mutual funds are considered PFICs by the IRS, subsequently punitively taxed (or at least it makes US taxes more complicated), and are generally to be avoided. Is this understanding correct, and applies also to a DC pension like this?

It would appear then the only available course of action would be to use one of the savings options, but the interest there is effectively nothing. Furthermore I understand while Japan considers these pension contributions tax free, the US does not, making it not that advantageous to match any contributions either. So it seems while it is of course nice to have this benefit, there's not much I can do with it...

Is my general understanding here correct?
Any other US expats in a similar situation out there who could share their experiences?

[Teflon]

My employer in Japan provides a company DC pension (確定拠出年金), to which any contributions can be managed with a variety of mutual funds or simple savings. However, I understand as a US citizen any foreign based mutual funds are considered PFICs by the IRS, subsequently punitively taxed (or at least it makes US taxes more complicated), and are generally to be avoided. Is this understanding correct, and applies also to a DC pension like this?

It would appear then the only available course of action would be to use one of the savings options, but the interest there is effectively nothing. Furthermore I understand while Japan considers these pension contributions tax free, the US does not, making it not that advantageous to match any contributions either. So it seems while it is of course nice to have this benefit, there's not much I can do with it...

Is my general understanding here correct?
Any other US expats in a similar situation out there who could share their experiences?

This was discussed in another thread: viewtopic.php?t=1581

In summary, if your DC pension plan is more than 50% funded by your employer then there's no reporting requirement and the PFIC rules don't apply. If it's more than 50% employee funded then it should be reported and PFIC rules apply.

[yokaze]

Ah, thanks so much! I tried searching through the forums on the topic, but apparently not deep enough. Very nice to see there's a bit of hope yet.