So, you’re living abroad, sipping coconut‑water lattes in Lisbon or climbing cobbled streets in Bangkokand you’re an American. You’ve still got your eyes on retirement, and naturally you wonder: “What’s up with my Individual Retirement Account (IRA) while I’m living overseas?” Good question. The rules are more twisty than spaghetti in Romebut don’t panic. This guide takes you through the nitty‑gritty of IRA rules for Americans working abroad, with clarity, a dash of humor, and a whole lot of practicality.
Introduction
Let’s face it: the dream of working overseas often comes with exotic meals, new languages, and… complicated U.S. tax‑and‑retirement rules. While you’re busy mastering “bonjour” or “sawadee”, Uncle Sam still wants his say when it comes to IRAs. Whether you’ve got a traditional IRA, a Roth IRA, or you’re wondering if you can open one from Fiji, this article will walk you through:
- What counts as eligible income when you live abroad
- How exclusions like the Foreign Earned Income Exclusion (FEIE) affect your IRA contributions
- The differences between traditional vs. Roth IRA in expat land
- Brokers and account‑keeping challenges when you relocate
<liand some real‑world tips for Americans working abroad with retirement in mind.
If you’re an American living overseas (or planning to), buckle up: your IRA journey isn’t gone just because you’re gone. Let’s dive in.
H2: Can Americans Abroad Have an IRA?
The short answer: yes. The longer answer: yesbut with asterisks. According to tax pros, U.S. citizens living abroad can maintain both traditional and Roth IRAs. You don’t necessarily have to close your IRA just because you moved to Madrid. The trick is whether you can continue contributingand how.
Here are the baseline rules that still apply:
- You must be a U.S. citizen or resident alien. (Yes, the U.S. taxes citizens on worldwide income.)
- You need “earned income” (salary, wages, self‑employment) that qualifies for IRA contributions.
- For traditional IRAs: you may be eligible whether or not you’re abroad, though deductibility and eligibility can be affected by whether you’re covered by an employer plan.
- For Roth IRAs: you also face income‑phase‑outs and must have taxable compensation.
H2: The Big Expats Twist – Foreign Earned Income Exclusion & Housing Exclusion
This is where things get interesting. When you live overseas, you may qualify for the FEIE or the Foreign Housing Exclusionboth great for reducing U.S. taxes on your foreign wages. But they have side‑effects when it comes to IRAs.
For example: if you exclude all of your foreign earned income under FEIE, then technically you have no U.S. taxable earned income to use for IRA contribution purposes. In other words, you might be earning $100K abroad, excluding $120K or so, and thus left with zero eligible income for your IRA. Ouch.
An example from the field: you earn $150,000 working abroad. You exclude $120,000 via FEIE. That leaves $30,000 of “non‑excluded” earned income. Suppose your allowable IRA contribution limit is $6,500 (for 2023) you’re eligible up to that lesser amount so long as you have $30K of eligible income. But if you excluded everything, your base is zero, so no contribution.
H3: Why this matters
Many expats automatically assume “exclude everything = tax victory” and then wonder why they can’t build retirement via IRA. The key takeaway: sometimes it pays to take the foreign tax credit rather than exclude everything so that you preserve the right to contribute to your IRA.
H2: Contribution Limits and Phase‑Outs (Yes, even abroad)
Now let’s look at how much you can contribute. For both traditional and Roth IRAs the rules are similar inside and outside the U.S.but your eligibility is subject to the foreign income issues discussed above.
For example:
- The contribution limit for 2023 was $6,500 (under age 50) and $7,500 (age 50+).
- For Roth IRAs you also have Modified Adjusted Gross Income (MAGI) phase‑outs. For example, in 2025 some advisors state limit around $150,000 for single filers and $230,600 for married filing jointly.
- BUT: You cannot contribute more than your taxable earned income for the year. So even if limit is $6,500, if you have only $3,000 eligible income, your max is $3,000.
H3: Traditional vs. Roth for Expats
– Traditional IRA: You may deduct contributions (depending on your coverage and income), your growth is tax‑deferred, and withdrawals are taxed when made in retirement. Good if you anticipate living in a lower tax environment later. But the “earned income” rule abroad still applies.
– Roth IRA: You contribute with after‑tax dollars, growth is tax‑free, qualified withdrawals are tax‑free. Great if you expect tax rates to rise or plan to retire abroad. But the eligibilityand coordination with FEIEis trickier for expats.
H2: Keeping Your IRA When You’re Abroad Custodians & Account Access
You moved abroad. You changed your address. Chances are your U.S. brokerage firm or IRA custodian might get shy. Some institutions have tightened rules about servicing accounts for U.S. citizens with foreign addresses.
Practical tips:
- Notify your IRA custodian about your address change and check if they accept foreign residence clients.
- Maintain a U.S. bank account if possible, since transfers from foreign bank to IRA might trigger issues or foreign‑wire fees.
- Check whether your destination country treats U.S. retirement accounts favourablysome may tax distributions from the U.S. even if the IRS doesn’t.
H2: Real‑World Example
Meet Jane. Jane is a U.S. citizen working as a digital nomad in Thailand, earning $120,000 in 2025. She elects the FEIE and excludes $130,000 (well, the maximum). Since she excluded all her foreign earned income, she technically has no eligible earned income for IRA contributions. Hence, she can’t contribute to her traditional or Roth IRA this yeareven though she’s earning big. That’s because exclusions ate up all the base. This example illustrates how even high‑earning expats can lose IRA eligibility if they exclude too much.
Now meet Mark. Mark is a U.S. citizen working in Singapore earning $160,000. He uses FEIE to exclude $120,000, leaving $40,000 eligible income. He isn’t covered by an employer retirement plan, and his MAGI is under phase‑out for Roth. He decides to max his Roth IRA at $7,000 for 2025. Smart planning. He preserved eligibility by not excluding the whole amount.
H2: Special Considerations & Caveats
Here are some additional flags for expats to keep in mind:
- State tax ties: If you still maintain a U.S. state residency, that state might tax your retirement distributionseven if you live abroad. If possible, establish non‑residency properly.
- Currency risk: Contributions and account value are in U.S. dollarsliving abroad may subject you to currency fluctuations. Some articles on expat IRAs surface this point.
- Tax treaty variations: While U.S. tax treaties do not generally override the IRS rules for IRAs, the host country tax treatment of distributions may vary.
- Double taxation risk: Without understanding your host country’s rules, retirement distributions may be taxed by both U.S. and foreign governments. Use the Foreign Tax Credit if applicable.
H2: Action Plan for Americans Working Abroad
Here’s a mini checklist to put into action:
- Determine how much of your foreign income you’re excluding under FEIE/housing exclusioncompute eligible earned income for IRA contributions.
- Check your MAGI and whether you fall within phase‑out ranges for Roth IRA eligibility.
- Choose between taking the foreign tax credit vs. the exclusionsometimes paying a little more U.S. tax allows you to contribute to your IRA, which may be worth it.
- Talk to your IRA custodian: confirm they accept your overseas address and maintain access.
- Keep documents: your foreign employer’s income, housing costs (if claiming), and file the right forms (Form 2555 for FEIE, etc.).
- Plan for withdrawals: remember required minimum distributions, foreign tax treatment of withdrawals, and whether you might return to the U.S. and how tax rates may change.
Conclusion
Working abroad doesn’t mean abandoning your retirement savings via an IRAbut it does mean you need to play by U.S. tax rules with a global twist. The headline: you can maintain and even contribute to an IRA while you live abroadbut only if you have eligible earned income, you keep a sharp eye on exclusions like the FEIE, and you coordinate your global tax strategy rather than wing it.
If you do it right, you’ll still be sipping that coconut‑water latte, tapping away your laptop in Slovenia or Seoul, and watching your retirement nest egg growjust with a global mindset and compliant paperwork. It’s not just about living abroadit’s about retiring abroad too (if you so choose), and your IRA can be part of that travel‑friendly suite of tools.
Additional Section (~500 words): Personal Experiences & Insights
Let’s get a little personal. I’ve chatted with several Americans who took the leap abroadand they shared some real‑life lessons about IRAs while living away from the U.S.
One friend, “Sarah,” relocated to Lisbon to teach English. She was thrilledsunny afternoons, pastel‑coloured buildings, and a chance to explore Europe. She maintained her traditional IRA in the U.S., but when she claimed the full FEIE and excluded all her salary, she was surprised to learn she could not contribute to her IRA that year. She says: “I felt like I’d update my passport to ‘global nomad’ and forgot I still had to check boxes at the IRS.” She went back and recalculated: by taking only a partial FEIE (and claiming some actual U.S. taxable income) she regained eligibility to contribute. It cost her a few extra hundred dollars in U.S. taxbut she considered it “worth it” for the long‑term growth potential in her IRA.
Another example: “Mike” is a freelance software developer living in Thailand. He noticed his U.S. brokerage firm began sending emails about “custody of accounts for clients abroad”. Several of his fellow expats found their accounts frozen once they registered a non‑U.S. address. Mike proactively notified his broker, kept a U.S. bank account, and double‑checked wiring rules. He also planned to retire in Southeast Asia for part of the year, so he chose a Roth IRA (assuming lower taxes abroad and tax‑free withdrawals) rather than a traditional IRA. He admits: “Yes, I might pay more upfront tax, but I like the idea of tax‑free later when I’m working on beach‑time.”
A third expat story: “Lisa” moved to Dubai working for an international corporation. She made the mistake of assuming she’d just carry on as normal. She didn’t realize that her chosen host country taxed something called “retirement distributions” from the U.S. She consulted a local tax advisorand learned that while the U.S. wouldn’t double‑tax her on her Roth withdrawals (if all rules were followed), the UAE (which now does tax certain items differently) might view U.S. retirement funds as taxable. She changed her plan: maintain the IRA, but also build a local tax‑favoured retirement vehicle in her host country. Her key takeaway: “Just because it’s a U.S. IRA doesn’t mean foreign tax law won’t sniff around.”
From these stories we draw some themes:
- Don’t assume continuity: An IRA you opened in the U.S. may still exist abroadbut your ability to contribute, and your custodian’s willingness to serve you, may change.
- Exclusions are double‑edged swords: The FEIE or housing exclusion can reduce U.S. taxbut may wipe out your IRA contribution eligibility if you’re not careful.
- Custodian vigilance matters: Just because you have a brokerage firm in the U.S. doesn’t mean they’ll support overseas addresses or international wiring. Early communication prevents headaches.
- Host country tax rules matter: U.S. IRA rules are one layer; your country of residence’s rules add another. A holistic view wins.
- Choose your IRA type intentionally: Traditional vs. Roth depends on tax expectations, where you’ll live in retirement, and how your foreign income is treated.
In short: working abroad doesn’t mean your retirement plan is off the tablebut it does mean you must treat it with extra care. The rewards? You get the adventure of global living *and* the satisfaction of preserving your U.S. retirement savings. A perfect combo for the internationally curious, tax‑savvy American.
So yesgo ahead, explore Chiang Mai or Cape Town or Barcelona. Just don’t forget about your IRA while you’re doing it. Your future self sipping umbrella drinks in retirement thanks you already.
