By Chad Creveling, CFA and Peggy Creveling, CFA
The Wall Street Journal invited Creveling & Creveling to be part of a panel of experts for personal finance on its WSJ Expat site. The following article originally appeared on the WSJ site and has been shared with permission:
Individual retirement accounts can be a great tool for those saving for retirement. The combination of tax-deductible contributions and tax deferral often allows funds to compound faster than in a taxable account.
But the problem for expats is that the IRA rules were written for the U.S. tax code, which can often conflict with the tax codes of the countries where they live and work. While a number of countries maintain double-taxation treaties with the U.S., so that expats don’t have to pay taxes in both countries, very few countries outside the U.S. allow expats to defer local taxes on their U.S. IRAs. IRA mistakes can be costly for U.S. expats.