For Expats, IRAs Have U.S. & Foreign Taxes. All U.S. persons who are resident tax payers overseas require our solution to their 401k/Individual Retirement Account (IRA) problem because: When the employer is no longer contributing to a 401k the employee takes it out of the employer plan and puts it into an IRA without U.S. Tax consequence…however; ● For a foreign resident U.S. person when he moves his 401k to an IRA it has moved from recognized international occupational pension law to domestic tax law. ● Overseas government regulated and registered international pension law is not subject to tax law. Meaning that for a U.S. Person in the USA there would not be a tax difference between the two laws. ● For overseas residents an IRA is subject to foreign income tax on gains and withdrawals. Here is the foreign tax consequence of rolling a 401k to an IRA:
● The government regulator is The Employee Retirement Income Security Act of 1974 (ERISA). ● Recognized in FATCA, DTA, TIEA and GATCA (93 jurisdictions beginning in 2017). ● Exempt from foreign country reporting on gains and accumulations. ● Withdrawals are subject to tax consequence specified by Double Taxation Agreements (DTA) or U.S. Treasury foreign country corresponding retirement plan agreements.