Expat Tax Planning Without Foreign Retirement Accounts

If you have no foreign retirement accounts, you avoid the most complex part of expat tax compliance -- PFIC reporting, treaty analysis, and multi-form filing. This simplification lets you focus on other tax optimization opportunities.

This simplifies your international tax picture significantly. Foreign retirement accounts are the primary source of PFIC complications, treaty analysis, and multi-form reporting burdens for repatriating expats. Without them, your CPA can focus on income reporting, foreign tax credits, and the transition back to US-based financial life.

Focus shifts to US retirement optimization. Upon return, you can contribute to US retirement accounts -- 401(k) through an employer, Traditional or Roth IRA if you have earned income. If you have been abroad for years and missed contribution opportunities, catch-up strategies become important. Workers age 50 and older can contribute an additional $7,500 to a 401(k) and $1,000 to an IRA above the standard limits.

You may still have foreign account reporting obligations. Bank accounts, investment accounts, and other financial accounts abroad trigger FBAR and FATCA requirements even without a retirement account in the mix. Any account with a balance that pushes you over the $10,000 aggregate FBAR threshold must be reported.

The tradeoff: You avoided the most complex piece of expat tax compliance, but you may also have years of lost retirement savings to make up for. A CPA can model accelerated contribution strategies to close that gap.