American Expat and Roth IRA

[caroburgh]

For the next 5 years or so, I will be using the Foreign Tax Credit instead of the FEIE because I moved from a tax-free salary in the Middle East to a heavily taxed salary in Central America. This means I can start investing in a Roth IRA (for as long as I’m using the FTC). However, when I move back to the Middle East and start using the FEIE again (and cease adding funds to the Roth IRA), will I still be allowed to do things with the funds that are in the IRA? Such as rebalance a stock/bond ratio in it? I’m assuming I will still be allowed hold the funds in the IRA even after I’m not allowed to contribute to it due to the FEIE.

 

[quasar92]

@caroburgh Yes - it’s on the contribution that FEIE is an issue. Rebalancing, distributions, etc. are all fine whether you’re using FEIE, FTC, or neither (as in, moved back to the US).

 

[teofan]

@caroburgh The biggest issue you’ll face is finding a broker who will let you make contributions with a foreign address.

 

[caroburgh]

@teofan Schwab with at least 25k deposit.

 

[teofan]

@caroburgh Will they actually let you make IRA contributions? Have you explicitly asked them that?

 

[caroburgh]

@teofan The only area of the world where you would run into Schwab investment restrictions (and maybe even Interactive Brokers) as an American expat is Europe (well… and probably crazy places like Syria, North Korea, etc). I don’t live there and don’t plan on living there.

 

[lulito485]

@caroburgh Does the foreign tax credit only count towards federal taxes or state taxes as well?

 

[patriotpaladin]

@lulito485 Would depend on the state, I haven’t seen it (but most people living and working abroad don’t pay state taxes)