First a quick refresher. A Roth IRA differs from a regular IRA or 401(k) as contributions are made with after-tax dollars. This means once you start distributing income, you don’t owe any taxes. All the money you see in a Roth IRA is yours. On the other side, contributions made to regular IRA’s or 401(k)’s are made with pre-tax dollars and still owe taxes.

However, for Americans living abroad it can be challenging to make qualified contributions to Roth IRA’s. Beside that, many countries do not recognise their tax-free nature and would either tax dividends, capital-gains or even add it to your yearly tax bill. Where you are geographically can have a significant effect on your tax exposure. Certain countries like Spain, Italy & Switzerland have a wealth tax, meaning they will include the Roth IRA within your yearly tax bill.

Every situation needs to be assessed individually, there’s no one size fits all.
Contact us to see how we can help you with your international situation.