Tax on money withdrawn from Roth 401(k) and Roth IRA when living outside the United States and over 59.5-year-old
Are Roth IRA distributions taxable overseas?
Nothing happens to your Roth IRA if you move abroad. The funds will still grow tax-free, and all the same required minimum distribution rules apply once you reach retirement age.
What happens to my Roth 401k if I move to another country?
If you opted for a Roth 401(k), again this will have no tax consequence except for any employer match amount, which is always pre-tax. But if you opted for a pre-tax 401(k), rolling into a Roth IRA will cause a large tax consequence – you’ll owe immediate tax on the contributions and growth.
What happens to my Roth IRA if I leave the US?
Yes, a U.S. citizen living abroad can have both a traditional and/or Roth IRA. The restrictions only come with making contributions—so, if you had an existing IRA before you moved abroad, you don’t have to get rid of it or transfer assets, but you may not be able to add to it while you’re overseas.
Do expats pay taxes on IRA withdrawals?
Early 401(k) and IRA withdrawals for expats
If you choose to withdrawal funds from an IRA or 401(k) before your funds have matured (generally, before you’re 59 ½) you will pay a tax on it—regardless of if you’re living in the U.S. or outside of it.
What happens to your 401k if you move overseas?
Unless there is a specific plan provision for it, your employer’s 401(k) plan cannot expel you as long as you are a plan participant. In many cases, you can keep your 401(k) account with the plan provider even after you leave the company and the country.
Can I withdraw money from my 401k if I leave the country?
The Bottom Line
If you’re a nonresident with a 401(k) and are planning to return to your home country, you can cash out the account, roll it over into an IRA, or leave the funds where they are until you turn 59½ and can start taking penalty-free withdrawals.
Why do I have to pay U.S. taxes if I live abroad?
You may wonder why U.S. citizens pay taxes on income earned abroad. U.S. taxes are based on citizenship, not country of residence. That means it doesn’t matter where you call home, if you’re considered a U.S. citizen, you have a tax obligation.
What happens to my retirement accounts if I move abroad?
If you do choose to transfer funds from a U.S. Qualified Plan to a foreign retirement plan, it will be neither be tax free nor will it count as a qualified rollover. This means moving your 401(k) to an international fund will result in U.S. tax liability and possibly the 10% penalty for an early withdrawal.
What countries do not tax us retirement income?
A handful of countries on our list, including Australia, Costa Rica, Malaysia, Panama, the Philippines and Uruguay, don’t tax any foreign income of expat retirees, while several others, including Colombia, Dominican Republic, France and Thailand, don’t tax pension and Social Security payments.
Can you collect Social Security if you live outside the United States?
If you are a U.S. citizen, you may receive your Social Security payments outside the U.S. as long as you are eligible for them.
Do retired expats have to pay U.S. taxes?
Yes, you read that right—if you are an expat enjoying retirement abroad, U.S. taxes may still be a reality. Regardless where in the world you live, you are still responsible for your U.S. tax obligations if you are still a U.S. citizen.