IRA & Roth IRA while living overseas
A client does not normally need to close an IRA or Roth IRA simply because they move outside the US.
The more important questions are whether they can continue contributing, whether the provider will service them overseas, how future withdrawals will be taxed and how the accounts fit alongside pensions and investments held elsewhere.
Josh Clancey works alongside US tax advisers and other professionals where Traditional and Roth IRAs form part of a wider cross-border retirement plan.
Start by separating the different IRA types
Traditional IRAs and Roth IRAs should not be treated as interchangeable.
The planning can differ materially because of:
- the tax treatment of contributions
- the tax treatment of withdrawals
- required minimum distributions
- conversion opportunities
- beneficiary treatment
- the client's continuing US tax status
- the tax treatment in the client's country of residence
The client's existing accounts should therefore be identified separately before any consolidation, rollover, conversion or withdrawal is considered.
Common planning areas for overseas IRA holders
Traditional IRA
A Traditional IRA can remain an important tax-deferred retirement asset after the client leaves the US.
The account should be reviewed alongside future withdrawal requirements, investment strategy and other retirement assets.
Roth IRA
Roth IRAs can provide valuable tax-free treatment under US rules where the relevant requirements are met.
Whether the client's country of residence recognises that treatment is a separate question.
Contributions while overseas
Living abroad does not itself prohibit IRA contributions.
Eligibility depends on the client's compensation, filing position and the applicable contribution and income-limit rules.
The interaction with the Foreign Earned Income Exclusion can require particular care.
Roth conversions
A Traditional-to-Roth conversion can create an immediate US taxable event.
For an overseas client, local-country taxation and treaty treatment may also need to be considered before proceeding.
Required minimum distributions
Traditional IRA owners generally need to begin required minimum distributions at the applicable RMD age. The current general starting age is 73 for individuals reaching that age before 2033.
Roth IRA owners are not required to take lifetime RMDs
Provider restrictions
Some US custodians restrict trading, new purchases or account servicing once a client becomes resident abroad.
Operational access should therefore be checked before any transfer is initiated.
Questions to ask before changing an IRA or Roth IRA
What type of IRA does the client hold?
Traditional, Roth, SEP and SIMPLE IRAs can have different rules and planning implications.
Is the client still a US taxpayer?
Citizenship, Green Card status or other factors may mean US filing obligations continue after relocation.
Does the client still have eligible compensation for contributions?
Contribution eligibility should be established before assuming that living overseas prevents further contributions.
Is the client claiming the Foreign Earned Income Exclusion?
The IRS confirms that the FEIE can exclude qualifying foreign earned income from US taxable income, and this can affect the compensation available for IRA contribution purposes.
Would a Roth conversion create tax in more than one country?
US tax and local-country treatment should both be reviewed.
Can the current custodian continue to service the account?
This should be checked before transferring from an existing provider.
What other retirement assets does the client hold?
The IRA should be considered alongside 401(k)s, pensions, Social Security and international investments.
Useful resources for advisers working with overseas IRA holders
IRA and Roth IRA Planning After Leaving the US
A focused technical brief covering the main planning considerations for Traditional and Roth IRA holders living internationally.
The Professional Adviser's Guide to US-Connected Clients
A broader guide to US retirement accounts, investments and financial-planning issues affecting internationally mobile clients.
UK Returners With 401(k), IRA or Roth IRA Accounts
A focused resource for clients moving or returning to the UK while retaining US retirement assets.
401(k) Planning for Clients Living Outside the US
A companion technical brief covering former US employer retirement plans.
US Retirement Accounts and Non-US Beneficiaries
A professional resource covering beneficiary-planning issues where US retirement assets are inherited internationally.
US-Connected Client Red Flag Checklist
A practical checklist for identifying retirement-account, investment, tax and cross-border issues requiring coordination.
Contributions can be more complicated than simply living overseas
A common assumption is that a US citizen living abroad cannot contribute to an IRA.
That is too simplistic.
IRA contribution eligibility depends on the individual's compensation and the relevant annual rules.
Where a client claims the Foreign Earned Income Exclusion, qualifying foreign earned income can be excluded from US taxable income up to the annual limit — $132,900 per qualifying person for 2026.
That can affect the amount of compensation available for IRA contribution purposes.
The answer may also differ depending on:
- whether income remains above the exclusion
- whether the client uses foreign tax credits instead
- filing status
- Roth IRA income limits
- whether the spouse has eligible compensation
This is an area where the US tax adviser should confirm contribution eligibility before money is added to the IRA.
Withdrawals, RMDs and treaty treatment need to be coordinated
Traditional IRA owners cannot leave assets untouched indefinitely.
Under the current rules, most Traditional IRA owners must begin RMDs at age 73, while Roth IRA owners generally have no lifetime RMD requirement.
For overseas residents, distributions can also create withholding and treaty issues.
IRS guidance states that US-source pension and annuity payments to nonresident aliens are generally subject to 30% withholding unless an applicable treaty allows a lower rate or exemption and the appropriate documentation, usually Form W-8BEN, is provided.
That withholding rate is not necessarily the client's final tax liability.
The relevant US and local tax advisers should establish the treatment before significant withdrawals or Roth conversions are made.
Financial planning can then focus on:
- withdrawal sequencing
- retirement cash flow
- investment strategy
- currency
- tax-aware asset use
- beneficiary planning
When should the referral happen?
A referral can be useful where the client:
lives outside the US with a Traditional or Roth IRA
is considering further contributions
is planning a Roth conversion
is approaching RMD age
has provider restrictions
is moving to the UK or another treaty jurisdiction
holds 401(k)s and IRAs that may need consolidation
has non-US beneficiaries
is unsure how the accounts fit into their wider retirement plan
Have a client living overseas with an IRA or Roth IRA?
If a client's US retirement accounts need to be coordinated with overseas residence, tax advice, other pensions or future retirement plans, an initial discussion can help establish where financial planning should sit alongside the specialist tax work.