Are KiwiSaver Employer Contributions Currently Taxable on My U.S. Return Even If I Cannot Access Them?
Yes, under U.S. tax law, a KiwiSaver account is classified as a Passive Foreign Investment Company (PFIC), and you must report it annually on Form 8621 regardless of whether the account distributed income to you. The U.S.-New Zealand tax treaty does not exempt KiwiSaver from PFIC reporting.
How KiwiSaver triggers PFIC reporting:
- KiwiSaver is a savings vehicle in which the fund holds shares and bonds; the account itself is treated as a PFIC
- Form 8621 is required every year you hold KiwiSaver
- You must report your proportionate share of the PFIC’s income even if no distribution occurred
- If you do not file Form 8621, the IRS can impose accuracy-related penalties of 40% on unreported income plus interest
PFIC filing and taxation mechanics for KiwiSaver:
| Element | Rule |
| Annual Form 8621 requirement | Yes, for each KiwiSaver account |
| Mark-to-market election | Often advisable to avoid deferred PFIC tax |
| Qualified Electing Fund (QEF) election | Requires fund cooperation; rarely available |
| Excess distribution rules | Applied to KiwiSaver payouts at retirement |
| Employer and member contributions | Treated as basis additions |
Filing options to reduce the PFIC tax burden:
- Mark-to-market (MTM) election on Form 8621: You report unrealized gains annually at ordinary income rates; distributions are then taxed as return of basis. This locks in annual gains but avoids compound deferred tax.
- QEF election: Only viable if the fund provides tax information; most KiwiSaver funds do not cooperate.
- Portfolio approach: Track multiple KiwiSaver accounts separately on Form 8621.
The employer contribution tax is also not deferred in the U.S.; both your contributions and employer contributions are added to your basis in the PFIC, not deferred at source.
For broader New Zealand tax context, see Expat Taxes in New Zealand.
Last updated on April 30, 2026
