Roth IRAs for Americans Living/Working Abroad

The Roth individual retirement account (Roth IRA) is the most versatile retirement tool. Contributions can be taken out at any time without penalties if you find yourself in deep financial trouble. The money in your Roth IRA grows tax free and can be withdrawn tax free in retirement or other circumstances. You can still contribute to a Roth IRA even if you’re living or working abroad, as long as you meet certain criteria.

Key Takeaways

  • People living or working abroad can contribute to Roth individual retirement accounts (Roth IRAs) the same way as people living in the United States. 
  • If you’re living or working abroad, make sure you have enough earned income after claiming the foreign earned income exclusion to contribute to a Roth IRA. 
  • You can still have a spousal IRA if you’re living abroad but don’t have your own earned income, as long as your spouse has enough earned income for both of you to contribute.

What Is a Roth IRA?

A Roth IRA is a type of individual retirement account (IRA) in which you put after-tax dollars. The money grows tax free and is withdrawn tax free in retirement. Contributions to the account (but not the gains on those contributions) can be withdrawn at any time tax free, and rollover contributions can be withdrawn tax free after five years. Roth IRAs are also inherited by your heirs tax free, which can make your contribution to them a form of life insurance.

Roth IRA contribution limits for 2022 are $6,000 for individuals under age 50. Individuals ages 50 and older can contribute up to $7,000. You cannot contribute to a Roth IRA if you earn more than the individual income limit of $144,000 or if you’re part of a married couple filing jointly with income over $214,000.

Fast Fact

In 2022, you can contribute up to $6,000 per year to a Roth IRA if you’re under age 50. If you’re 50 or older, you can contribute up to $7,000 per year.

Can You Contribute to a Roth IRA If You Live or Work Abroad?

If you are a U.S. citizen or permanent resident living or working abroad, you can contribute to a Roth IRA as long as you meet certain requirements. You can only contribute if you have earned income under the individual income limit of $144,000 in 2022 or the married filing jointly income limit of $214,000 in 2022.

Earned Income

You must have earned income to contribute to a Roth IRA. To determine if you have enough earned income to contribute to a Roth IRA, the Internal Revenue Service (IRS) will look at your modified adjusted gross income (MAGI). Individuals who had income from working in the U.S., whether from a job before they left, business trips to the U.S., or compensation from the U.S. government, usually have earnings that are close to their MAGI. 

For MAGI purposes, many expats or citizens living abroad will take the foreign housing and foreign earned income exclusions. These exclusions usually reduce MAGI significantly and could make someone ineligible to contribute to a Roth IRA. In 2022, the foreign earned income exclusion is on the first $112,000 earned in a foreign country. Consult with your tax preparer to see if taking a partial exclusion could be possible or advisable in your situation.

Can you withdraw from a Roth individual retirement account (Roth IRA) while living or working abroad?

Yes, you can take money out of your Roth individual retirement account (Roth IRA) while you’re living or working abroad. The same Roth IRA withdrawal rules that apply to people living in the U.S. apply to U.S. citizens or permanent residents living abroad. Standard contributions can be withdrawn from your Roth IRA at any time. Rollover contributions can be withdrawn from your Roth IRA after five years. Gains in your Roth IRA can only be withdrawn without penalty if you’ve held the account for at least five years and you’re age 59½ or older.

What is the deadline to contribute to a Roth IRA?

You can contribute to a traditional or Roth IRA through the tax filing deadline for that year. In most years, the deadline is April 15, unless that date falls on a holiday or a weekend. The date can change depending on other factors. For instance, the deadline was extended in 2020 and 2021 due to the coronavirus pandemic. For the 2021 tax year, you have until April 18, 2022, to contribute to a Roth IRA, since April 15 is a federal holiday.

Can you contribute to a spousal IRA while living or working abroad?

If you are part of a married couple filing jointly living abroad and the modified adjusted gross income (MAGI) on your tax return is more than $12,000, then you can both contribute up to $6,000 to your individual IRAs. Even if one person within the married couple had zero earned income, they will be able to contribute to a spousal IRA.

The Bottom Line

You can contribute to a Roth IRA if you’re a U.S. citizen or permanent resident living or working abroad as long as you have enough earned income after any tax exemptions and you don’t earn more than the earned income limit. Roth IRAs are a powerful tool to save for retirement and emergencies in a worst-case scenario. If you don’t yet have one, you may want to strongly consider opening one if you’re able to.

Article Sources

Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy.
  1. Internal Revenue Service. “Publication 590-B (2020), Distributions from Individual Retirement Arrangements (IRAs): Roth IRAs.”

  2. Internal Revenue Service. “Retirement Topics — IRA Contribution Limits.”

  3. Internal Revenue Service. “Amount of Roth IRA Contributions That You Can Make for 2022.”

  4. Internal Revenue Service. “Figuring the Foreign Earned Income Exclusion.”

  5. Internal Revenue Service. “Traditional and Roth IRAs.”

  6. Internal Revenue Service. “Publication 590-A (2021), Contributions to Individual Retirement Arrangements (IRAs): Kay Bailey Hutchison Spousal IRA Limit.”

Take the Next Step to Invest
×
The offers that appear in this table are from partnerships from which Investopedia receives compensation. This compensation may impact how and where listings appear. Investopedia does not include all offers available in the marketplace.
Service
Name
Description