Payments from a pension plan under Section 401(k) of the US Internal Revenue Code are subject to income tax according to Section 22 No. 5 Sentence 2 letter b of the German Income Tax Act if made before 1 January 2025. The Supreme Tax Court’s conclusion on the matter is largely the result of the structural comparability recognized and acknowledged by Germany pursuant to Section 1 (1), § 1b (2) and (3) of the Law on Promotion of Employer Pension Schemes (Betriebsrentengesetz) specifying ways and means in which employers can organize occupational pension schemes.
The Regional Tax Court of Rhineland Palatinate has decided that contributions to the US 401(k) retirement plan deducted at source from the employee's salary are to be taxed as income from employment in Germany.
