Pillar 2 variety of quetions

Hi, I need some assistance with my Pillar 2

Who am I: USA citizen living in Zurich working here for 7ish years

In the first Quarter of 2024 I will be moving back home to the USA, I have a job offer in the USA.

I have a Pillar 2 account

Questions (I kinda know some of the answers, but I'll ask for clarification)

1) I can (or can not) rollover my Pillar 2 into a retirement savings in the USA

2) If I've already deregistered, can I still pull the money out of Pillar 2 and purchase a property (as my primary residence) in the USA?  Does this save me from any taxes?

3) If I use a vested benefit account, is this normal, safe - acceptable......  

--- my thought would be to move my pillar 2 into a vested benefits account to another canton to save on taxation.  Then once there to move it to my personal account in the USA

Thank you for your help

1) I can (or can not) rollover my Pillar 2 into a retirement savings in the USA

No you cannot, unfortunately. There is no agreement between Switzerland and the US that allows for this (or Switzerland and any other country that I know of). Of course, it may be possible to put all or part of the money in an IRA or similar and benefit from tax deductions.

2) If I've already deregistered, can I still pull the money out of Pillar 2 and purchase a property (as my primary residence) in the USA?  Does this save me from any taxes?

Yes. You can withdraw money from your vested benefits account to buy a primary residence. That applies whether or not you live in Switzerland, and whether or not the property is in Switzerland. However, there is no tax benefit. The same Swiss withholding tax will apply as would if you withdrew simply on account of leaving Switzerland for a non-EFTA/EU country. Vested benefits foundations charge fees for both (early withdrawals on account of leaving Switzerland, and early withdrawals on account of buying a home).

3) If I use a vested benefit account, is this normal, safe - acceptable......  

--- my thought would be to move my pillar 2 into a vested benefits account to another canton to save on taxation.  Then once there to move it to my personal account in the USA

It isn't just acceptable. It is recommended. The canton of Schwyz has the lowest withholding tax. Obwalden is also a good location.

As far as I know, of all the Shwyz-based foundations, the foundation used by Finpension has the lowest fee for withdrawals due to emmigration, but only if you keep your money there for more than one year. In that case, you pay 500 francs.
Liberty charges 600 francs, but there is no minimum time requirement. Tellco also charges 600 francs. The Schwyzer Kantonalbank charges 800 francs.

If you do not have a large amount of money in vested benefits, then Obwalden and the Obwaldner Kantonalbank is worth looking at. The tax in Obwalden is slightly higher than in Schwyz, but the Obwaldner Kantonalbank only charges 100 francs for withdrawals due to emmigration (no fee if you withdraw to an Obwaldner Kantonalbank account).

In every case, I would recommend that you use Transferwise or a similar service to transfer your francs to your US account, as you could lose a lot of money on bad exchange rates by having the Swiss vested benefits foundation transfer it directly to your US account.

Thank you for your help --- this makes me feel much better knowing these answers.

1 follow up question.

I was talking to a friend that seems to know a bunch about taxes, and I said the following:

1) I would tell my pillar 2 people to send my pillar 2 to a bank / vested benefits account outside of zurich (where I live) so I can save on taxation.  I read, as an example, that for a pension of 200,000 Zurich will cost 14,000 in taxes  but in Schwyz it would only cost 7,000, and the fee for liberty is 1,200 - so a "savings" of approx 6,000

2) he said, you live in zurich, so you will be taxed in zurich - it does not matter where you have your money at.

I think I wrote all this correctly -- 

he said, you live in zurich, so you will be taxed in zurich - it does not matter where you have your money at.

There are two different taxes: Retirement capital withdrawal tax, and withholding tax on retirement capital withdrawals. The first applies if you live in Switzerland when you withdraw. The second applies if you do not live in Switzerland when you withdraw.

• If you live in Switzerland when you withdraw your vested benefits, you pay the retirement capital withdrawal tax of your canton of residence. That would be the case if, for example, you wanted to buy a home in Switzerland, and want to withdraw vested benefits early to use for your home.
• If you live outside of Switzerland when you withdraw your vested benefits, you pay the withholding tax in the canton where the vested benefits foundation is domiciled.

So it is true that if you live in Zurich when you make the withdrawal, then it does not matter where the vested benefits foundation is located. You will pay capital withdrawal tax in Zurich.

But if you will wait and withdraw the money when you leave Switzerland, then the location of the foundation is important, because that is the canton where you will pay the withholding tax. As far as I know, the double-taxation agreement between Switzerland and the United States does not let you reclaim the Swiss withholding tax. So you will want to keep it to a minimum because you cannot reclaim it.

THANK you this is very clear and helpful.