Taxation of IRA distributions - Article 19a of DTA

[Bandon]

I am a retired US citizen, tax-resident in Germany. In 2026 I will begin receiving distributions from my IRA in the US. My IRA was created at my retirement by a roll-over from 403(b) and 457 pension savings plans funded when I worked at public state University in the US. I have read that Article 19a of the double taxation agreement states that pensions derived from governmental sources are taxed only by the US. Does anyone have experience with this situation? I assume I will have to declare my distributions on my German tax form, as the income influences my Progessionsvorbehalt. How do I convince the Finanzamt that they don't get to tax the money? Thank you.

[bethannbitt]

How do I convince the Finanzamt that they don't get to tax the money? Thank you.

The short answer is: You can't. If you reside in Germany then the Finanzamt gets to tax your IRA distributions and that tax you pay will be credited on your US tax return. I am married to a retired US academic and can speak from several years of personal experience filing both DE and US tax returns. Feel free to PM me.

[PandaMunich]

I am a retired US citizen, tax-resident in Germany. In 2026 I will begin receiving distributions from my IRA in the US. My IRA was created at my retirement by a roll-over from 403(b) and 457 pension savings plans funded when I worked at public state University in the US. I have read that Article 19a of the double taxation agreement states that pensions derived from governmental sources are taxed only by the US. Does anyone have experience with this situation? I assume I will have to declare my distributions on my German tax form, as the income influences my Progessionsvorbehalt. How do I convince the Finanzamt that they don't get to tax the money? Thank you.

I think you mean article 19 of the double taxation agreement between Germany and the USA: http://www.pinkernell.de/dbausa.htm#Art19
Your IRA withdrawals do not fall under article 19 since they are not a government pension, i.e. they are not:

• 2. a) Notwithstanding the provisions of paragraph 1, pensions and other similar remuneration paid by, or out of funds created by, a Contracting State or a political subdivision, local authority or an instrumentality thereof to an individual in respect of services rendered to that State or subdivision, authority or instrumentality shall be taxable only in that State.

Your IRA (individual retirement account) is a US pension plan, since it is mentioned in the protocol: http://www.pinkernell.de/dbausa.htm#Protocol

• 16. WITH REFERENCE TO PARAGRAPH 4 OF ARTICLE 18A (PENSION PLANS)
  
  a) For purposes of paragraph 4 of Article 18A, the term "pension plan" shall include the following and any identical or substantially similar plans established pursuant to legislation enacted after the date of signature of this Protocol:
  
  aa) In the case of the United States, qualified plans under section 401(a) of the Internal Revenue Code, individual retirement plans (including individual retirement plans that are part of a simplified employee pension plan that satisfies section 408(k), individual retirement accounts, individual retirement annuities, and section 408(p) accounts, and Roth IRAs under Section 408A), section 403(a) qualified annuity plans, section 403(b) plans, and section 457(b) governmental plans.

which means that its taxation is governed by article 18A of the double taxation agreement: http://www.pinkernell.de/dbausa.htm#Art18A

Please also read: viewtopic.php?p=3590

[Bandon]

Thank you both for taking the time to correct my overly-optimistic, and therefore incorrect, reading of tax law.