The following question was posted on an expat forum recently by a lady with dual U.S./Swiss citizenship who recently got divorced. I will try to explain the situation the best I can, but I am by no means a tax pro so I might use inexact or ambiguous terms...
The former couple share a retirement account in Switzerland and the plan administrator has given two choices:
1) Transfer her share of money on a vested benefit account (held in Switzerland) till her retirement.- Will the IRS levy some sort of tax on this transaction? Any paperwork that needs to be filled out for the IRS?
- She knows that she has to report interest earned on the account to the IRS, but what will she need to do with the IRS at the time she retires and will start withdrawing from the account?
2) Withdraw her share of the money. Switzerland will levy taxes on this, but what about the IRS?