How is my US 401(k) or IRA taxed once I live in Germany?
Short answer: In Germany, US 401(k) and IRA distributions are generally taxable as 'other income' (Sonstige Einkünfte). Under the US–Germany treaty, private pension distributions paid to a German resident who is not a US citizen are taxable only in Germany. US Social Security paid to a German resident is taxable only in the US.
Written and reviewed by Anthony Walsh, Selanis. Last reviewed 2026-10-06.
Why it works this way
The US–Germany treaty (Article 18) differs from the French treaty. For German residents, the right to tax a private pension (like a 401(k)) belongs to Germany. You report the distribution on your German return (Anlage R AUS for foreign pensions) and Germany applies its progressive rates. If you are not a US citizen, file Form W-8BEN with the plan so the US does not withhold 30%. US citizens are covered by the saving clause and use foreign tax credits instead.
The tax-deferred status of the account *growth* is protected. The treaty (as amended in 2006) ensures that Germany will not tax the dividends or capital gains inside your 401(k) while you are resident. Tax is only triggered when you actually take money out of the plan. This is a crucial protection that prevents your 401(k) from being taxed like a regular brokerage account.
Roth IRAs are less settled. The treaty protocol covers individual retirement accounts, so growth should be deferred, but there is no clear German ruling that Roth withdrawals are tax-free. The earnings portion may be taxed in Germany when you withdraw it.
The expensive mistake: Assuming the 25% Abgeltungsteuer applies to 401(k) distributions
401(k) distributions are generally taxed as ordinary income at your progressive rate (up to 45%), not at the flat 25% rate for investment income. This can lead to a much higher tax bill than expected if you take large distributions in a single year.
What to do
- Report distributions on Anlage R — Report US pension distributions on Anlage R AUS so the treaty treatment is applied correctly.
- Stop unnecessary US withholding — Non-US citizens give the plan custodian Form W-8BEN claiming the treaty rate. US citizens use Form 1116 credits for German tax paid instead.
- Consider the timing of your first distribution — Wait until you are fully settled in Germany to take your first distribution to ensure the treaty rules are applied correctly for that tax year.