Expat Retirement Plans

As with most financial planning issues for Americans living abroad, retirement planning options can be more limited and more complex than they are when living in the U.S. In most cases, the familiar U.S. employer-sponsored retirement plans like 401(k)s are not available to expats. Foreign employers cannot offer them since they are required to be set up in the U.S., and most U.S. employers don’t offer them, primarily because the company uses a foreign business entity for tax purposes.

What options does that leave to the American living overseas and trying to save for retirement? IRAs, SEP IRAs and Solo 401(k)s for the self-employed, U.S. brokerage accounts, and on a limited basis, tax- deferred annuities, can all proved to be useful tools for American expats to save for retirement. I’ll discuss IRAs, SEP IRAs, and Solo 401(k)s here.

Many Americans think that they cannot continue to contribute to an IRA once they move outside of the U.S., but they can if they have unexcluded earned income. To be clear, it does not matter if it is foreign- sourced or U.S.-sourced income, just that it is unexcluded and earned.

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