Think twice before making additional contributions to your 2nd or 3rd Pillar accounts

Additional contributions to your Swiss 2nd and 3rd Pillar pension accounts may lower your current Swiss tax burden and increase your retirement savings, however, you cannot deduct these contributions from your U.S. taxable income.

Being subject to U.S. taxes in Switzerland can present unique challenges as these pension accounts are considered “non-qualified” pension plans by the IRS.

The unintended result of additional contributions may be that lower Swiss taxes increase your U.S. taxes because you will have less Swiss tax to claim as a foreign tax credit on the U.S. side.

A possible alternative may be to invest in a U.S.-based IRA account.

Careful retirement planning should take both your Swiss and U.S. situation into account.