Roth IRA Rules While Living Abroad

by Roth IRA Rules

While you can continue to contribute to your Roth IRA even while you are not living in the US, the rules and penalties will be somewhat different. First, you will only be able to maintain your Roth IRA for as long as you are are a US citizen. If at anytime you decide to apply for citizenship in another country, you will need to cash out your Roth IRA. Depending on where you decide to live, you may be able to withdraw and convert your Roth IRA into a foreign equivalent investment account.

Those that dual citizenship in the US and in another country will need to consult with a financial adviser in their home country. Even if you are able to cash out a portion of your Roth IRA in the United States with no penalties, it is possible that you will be responsible for paying taxes in your current country of residence.

For instance, Roth IRAs can be used by first time homeowners if they purchase property after their accounts are established. However, if you are living in the UK any withdrawal from your Roth IRA will be taxed as if it were a pension. This is true whether you are buying a property for personal or investment purposes. You can use a buy to let mortgages calculator in order to see if purchasing a rental property will yield enough profit to justify withdrawing from your Roth IRA early while residing in the UK.

Although there are some exceptions, living abroad while contributing to a Roth IRA can be the most effective way of maxing out your contributions each year. Those that plan to move to another country for a year or more for job related purposes are able to get the maximum benefit.  If your annual salary is $91,500 or less, you will not be taxed in the US. US citizens living abroad with their spouses get to write off a total of $183,000 per year before being held liable for any federal taxes. Of course, you may also be responsible for paying taxes in whatever country you are living in, so it is important to do your research before making a move.

US residents with marketable job skills or a college education can gain financial stability by looking for employment in countries with low taxation rates. First, you will need to establish your Roth IRA and be in a position to contribute the maximum amount each year. You can use online calculator mortgage rates to see how the housing market is fairing back home, then make a withdrawal from your Roth IRA to pay down your mortgage note.

Unless you plan on giving up your US citizenship prior to your Roth IRA maturing, the tax benefits that come from working and living abroad are unparalleled. You can establish a Roth IRA for yourself, your children and your spouse, avoid penalties and create a stable future for your entire family. Unlike traditional college and retirement funds, your Roth IRA can be used for just about any purpose after it has matured. If you have been offered a position in a foreign country, find out how you can make the most of your finances before you make a final decision.

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