Can I contribute to an IRA or 401(k) while living abroad?

Yes, you can contribute to an IRA or 401(k) while living abroad, but there are important restrictions to understand.

**IRA Contributions**: You can contribute to a Traditional or Roth IRA only if you have earned income that is NOT excluded under the Foreign Earned Income Exclusion (FEIE). This is a critical point: if you use FEIE to exclude all of your foreign income, you may have zero 'includible compensation' and therefore cannot contribute to an IRA. The contribution limit for 2025 is $7,000 ($8,000 if age 50+). If you partially exclude income, you may still contribute up to the amount of non-excluded earned income.

**401(k) Contributions**: If you work for a US employer that offers a 401(k) plan, you can typically continue contributing regardless of where you live. The 2025 contribution limit is $23,500 ($31,000 if age 50+). Foreign employer plans generally do not qualify as 401(k)s and may trigger complex PFIC or foreign trust reporting.

**Roth IRA Income Limits**: Roth IRA eligibility phases out at higher income levels ($150,000-$165,000 for single filers in 2025). If you use FEIE and it reduces your Modified Adjusted Gross Income (MAGI) below the phase-out threshold, you may regain Roth IRA eligibility.

**Strategy Consideration**: Some expats find that forgoing FEIE and using the Foreign Tax Credit instead allows them to make full IRA contributions, which may be more beneficial long-term. A tax specialist can model both approaches for your situation.