I am a German National working in the US on a H-1B Visa. I am currently planning my retirement investments (I am in my twenties now) and I am trying to understand the tax implications.

I have a private retirement plan in Germany as well as the option to establish a 401K in the US (tax-free contributions). If I go back and live permanently in my home country when I reach retirement age and withdraw my US 401K contributions from there, will they be taxed in the US or in Germany? If I will concurrently withdraw contributions from my German retirement plan, do I file for taxes on those in Germany or do I file for both contributions/ earnings in one country? I can not imagine that I will get to pick the country with the lower taxes?!

If the money from the US 401K will later get taxed in Germany (with much higher taxes than the US), I might be better of to pay my taxes in the US now and transfer it to Germany now to invest there.

I appreciate your advice!

Your US 401k withdrawal would be taxed only in the US and due to dual tax treaty with Germany would not be taxed again in Germany!

Regarding your next question regarding withdrawn from German retirement plan, this tax question I would refer to a German Tax expert, but I suspect that these would only be taxed in Germany.

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Thank you so much for your helpful reply!

So as a general rule if I have income in more than one country (I assume the 401K withdrawels at retirement age can be considered income), I have to pay taxes in the country where I earn it, regardless of where my residence is? So I pay taxes in both countries, and in each country I only report the income earned in that country thanks to the tax treaty?

In other words: A tax treaty means I still HAVE to pay taxes in the country I earn the money, but it does not get taxed AGAIN in my country of residency. But it does not work the other way round, I can not have my foreign income get taxed in my country of residency and not report it in the country I earned it. Correct?

is it a global tex treaty or among few countires?

I am no sure. As far as I know it is a dual tax treaty between Germany and the US?

yeah i think it too