Pension and Retirement Taxation in Micronesia

Micronesia's retirement system is built around the FSM Social Security System (FSSS), supplemented by private pension arrangements. This guide covers the tax treatment of pension contributions, investment returns, and retirement income.

FSM Social Security System (FSSS)

Contributions

Contributions to the FSSS are mandatory for all employed individuals:

Benefits

State pension benefits are generally taxable as ordinary income in the hands of the recipient:

Private Pension Plans

Qualified Retirement Plans

Micronesia allows tax-favored treatment for approved private pension plans:

Non-Qualified Plans

Contributions to non-approved plans are made with after-tax dollars, but investment growth may be taxed on an accrual basis.

Retirement Income Taxation

State Pensions (FSSS)

FSSS retirement pensions are taxable as ordinary income at progressive PIT rates.

Private Pensions

Withdrawals from qualified retirement plans are taxed as ordinary income at progressive PIT rates.

Tax Planning for Retirement

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