Foreign Earned Income Exemption and U.S. 401k?

For investors outside the US. Personal investments, personal finance, investing news and theory.
Sister forums: Canada, Spain (en español)
---------------
Post Reply
User avatar
Topic Author
Geographer
Posts: 33
Joined: Sun Jun 03, 2018 12:45 pm
Location: Virginia

Foreign Earned Income Exemption and U.S. 401k?

Post by Geographer » Tue Aug 06, 2019 5:17 pm

Good evening! I'm considering a new position that would be in Europe, but for a US company under an international service agreement. I was told the total compensation would be completely tax exempt if I stay for at least 330 days since it's within the $105k Foreign Earned Income Exemption (FEIE) threshold.

That brings up the question, would I be eligible to contribute to the company's 401k plan? My research indicates that IRA contributions would be a definite no-go unless we end up above the income threshold, but I can't find a definite answer on whether or not I'd be able to contribute exempt income to my 401k plan. The company offers Roth 401k contribution options AND after-tax contributions, so mega backdoor Roth could be a potential too.

Articles like https://blog.visor.com/expats/saving-retirement-expat/ make it appear that 401ks CAN be contributed to, and even recommends Roth 401k contributions because they will never be taxed. However, articles like https://moneymattersforglobetrotters.co ... e-to-401k/ make it seem unclear whether or not 401k contributions can be made with FEIE income.

Does anyone have a clear answer on whether or not I'd be able to do Roth 401k contributions to my plan with the excluded income? And if so, could I go above and beyond and do mega backdoor Roth contributions? Thanks in advance!

sawdust60
Posts: 232
Joined: Tue Jul 17, 2018 12:06 pm

Re: Foreign Earned Income Exemption and U.S. 401k?

Post by sawdust60 » Tue Aug 06, 2019 11:53 pm

You might try the search box with the terms: Foreign Exclusion, and do it again with the country.

Check the wiki: Taxation as a US person living abroad - Investing - 401K

I can see part of your question as 401K plans can have contribution limits imposed by the employer's plan:
How do you get more of your income into a Roth IRA?

In reading some of the links, two questions:
1. Do you have existing 401K or IRA accounts; will you have opportunities to do some Roth conversions? It wouldn't be covered by FEIE, but perhaps the amount of your standard deduction would cover some.
- - just questions; I do not know how marginal tax rates work with foreign taxes, FEIE or Foreign Tax Credit.

2. You said:
the total compensation would be completely tax exempt if I stay for at least 330 days
Perhaps no U.S. tax, but what about foreign country's tax?

Also, don't overlook FICA taxes.

TedSwippet
Posts: 2370
Joined: Mon Jun 04, 2007 4:19 pm

Re: Foreign Earned Income Exemption and U.S. 401k?

Post by TedSwippet » Wed Aug 07, 2019 2:39 am

Also, note that if you are from Virginia (as suggested by your user profile), the state will tax your non-US income unless you take affirmative steps to completely terminate state domicile. From this article:
Virginia is one of a few states that make it especially difficult for you to terminate your state residency. You may think that the fact that you no longer live there is enough. However, that is not the case in the Commonwealth of Virginia. In Virginia, it is not only about where you reside, but it is a matter of your “legal domicile.”

According to the Virginia Department of Taxation, if you have not abandoned your “legal domicile in Virginia and established legal domicile in another (jurisdiction, you) remain a domiciliary resident of Virginia, even if residing in another jurisdiction for a number of years.” As an example of a domiciliary resident, Virginia cites an expat circumstance: “A resident of Virginia who accepts employment in another country is a domiciliary resident, unless appropriate steps are taken to abandon Virginia as the state of domicile.”

ivk5
Posts: 820
Joined: Thu Sep 22, 2016 9:05 am

Re: Foreign Earned Income Exemption and U.S. 401k?

Post by ivk5 » Wed Aug 07, 2019 2:56 am

Check with your employer/plan and don’t take my word for it, but I believe you can only make employee contributions to 401k plans (elective deferrals) from US-sourced income. Meaning that if all of your income during the relevant period is foreign-sourced, you would not be able to make elective deferrals into a 401k plan from that income. That’s been my experience as a US expat, anyway.

curryitr
Posts: 36
Joined: Fri Jan 04, 2019 8:29 am

Re: Foreign Earned Income Exemption and U.S. 401k?

Post by curryitr » Wed Aug 07, 2019 5:57 am

When I worked for my employer overseas they allowed me to contribute into a Roth 401k which is the best option for someone claiming the FEIE. Also, the employer contributions and employer match went in as pre tax funds, but they allowed in plan Roth conversions of those funds once a year which made sure everything was Roth. As long as the conversion is under your standard deduction you won’t pay tax on it.

Also, this would be a good opportunity for you to do some Roth conversions while living overseas, because you can potentially convert traditional IRAs and 401Ks to Roth tax free. Either 12k or 24k a year depending on if you are married.

User avatar
Topic Author
Geographer
Posts: 33
Joined: Sun Jun 03, 2018 12:45 pm
Location: Virginia

Re: Foreign Earned Income Exemption and U.S. 401k?

Post by Geographer » Wed Aug 07, 2019 2:52 pm

TedSwippet wrote:
Wed Aug 07, 2019 2:39 am
Also, note that if you are from Virginia (as suggested by your user profile), the state will tax your non-US income unless you take affirmative steps to completely terminate state domicile. From this article:
Ted -- thanks for the heads up on the Virginia domicile. We'll have sold our cars and will maintain residence in Europe for the entire 2020 calendar year, with no remaining assets or income in Virginia. The only thing we plan on keeping are our drivers licenses. Hopefully this exempts us from any Virginia state income tax.
curryitr wrote:
Wed Aug 07, 2019 5:57 am
When I worked for my employer overseas they allowed me to contribute into a Roth 401k which is the best option for someone claiming the FEIE. Also, the employer contributions and employer match went in as pre tax funds, but they allowed in plan Roth conversions of those funds once a year which made sure everything was Roth. As long as the conversion is under your standard deduction you won’t pay tax on it.

Also, this would be a good opportunity for you to do some Roth conversions while living overseas, because you can potentially convert traditional IRAs and 401Ks to Roth tax free. Either 12k or 24k a year depending on if you are married.
curryitr -- I think my case will be exactly like yours. Do you (or anyone else) have any information stating that this CAN be done? I see a lot on the internet saying that you can't contribute to a 401k with FEIE income.

And if this is possible, could I also contribute After Tax above the $19k limit, and convert them to Roth? Sounds like this is the optimal scenario for getting as much as possible into the Roth 401k. Thanks again!!

curryitr
Posts: 36
Joined: Fri Jan 04, 2019 8:29 am

Re: Foreign Earned Income Exemption and U.S. 401k?

Post by curryitr » Wed Aug 07, 2019 9:06 pm

Can’t speak for anyone else but my employer had about 4000 employees all contributing into Roth 403b plans living abroad.

User avatar
Topic Author
Geographer
Posts: 33
Joined: Sun Jun 03, 2018 12:45 pm
Location: Virginia

Re: Foreign Earned Income Exemption and U.S. 401k?

Post by Geographer » Sat Aug 10, 2019 4:34 pm

curryitr wrote:
Wed Aug 07, 2019 9:06 pm
Can’t speak for anyone else but my employer had about 4000 employees all contributing into Roth 403b plans living abroad.
Cool, thanks for sharing! It sounds like an incredible benefit to be able to contribute to Roth 401k while overseas, and this makes me feel much better about it.

Storamin
Posts: 30
Joined: Sun Jan 15, 2017 6:25 am
Location: Düsseldorf, Germany

Re: Foreign Earned Income Exemption and U.S. 401k?

Post by Storamin » Sun Aug 11, 2019 2:14 am

Geographer wrote:
Wed Aug 07, 2019 2:52 pm
TedSwippet wrote:
Wed Aug 07, 2019 2:39 am
Also, note that if you are from Virginia (as suggested by your user profile), the state will tax your non-US income unless you take affirmative steps to completely terminate state domicile. From this article:
Ted -- thanks for the heads up on the Virginia domicile. We'll have sold our cars and will maintain residence in Europe for the entire 2020 calendar year, with no remaining assets or income in Virginia. The only thing we plan on keeping are our drivers licenses. Hopefully this exempts us from any Virginia state income tax.
https://www.artiopartners.com/blog/stat ... ax-expats/

Virginia is extremely difficult to terminate your domicile. Why keep your Drivers License? You can transfer them over to a European license, sometimes without a test, and then again when you move back.

Will you be on an expat assignment or a local contract? Is this your current employer? Who is handling the tax reporting and do you have access to them for tax planning?

Where to in Europe are you moving?

User avatar
Topic Author
Geographer
Posts: 33
Joined: Sun Jun 03, 2018 12:45 pm
Location: Virginia

Re: Foreign Earned Income Exemption and U.S. 401k?

Post by Geographer » Sun Aug 11, 2019 1:02 pm

Storamin wrote:
Sun Aug 11, 2019 2:14 am
Geographer wrote:
Wed Aug 07, 2019 2:52 pm
TedSwippet wrote:
Wed Aug 07, 2019 2:39 am
Also, note that if you are from Virginia (as suggested by your user profile), the state will tax your non-US income unless you take affirmative steps to completely terminate state domicile. From this article:
Ted -- thanks for the heads up on the Virginia domicile. We'll have sold our cars and will maintain residence in Europe for the entire 2020 calendar year, with no remaining assets or income in Virginia. The only thing we plan on keeping are our drivers licenses. Hopefully this exempts us from any Virginia state income tax.
https://www.artiopartners.com/blog/stat ... ax-expats/

Virginia is extremely difficult to terminate your domicile. Why keep your Drivers License? You can transfer them over to a European license, sometimes without a test, and then again when you move back.

Will you be on an expat assignment or a local contract? Is this your current employer? Who is handling the tax reporting and do you have access to them for tax planning?

Where to in Europe are you moving?
Good info, thanks for sharing. I'll be in Italy on a contract with a US company. We will be given Italian visas to authorize us to stay in the country for an extended time. I was also instructed to keep my stateside driver's license; and even renew it if it's nearing expiration. Since I'll still be a US Citizen, is it possible to NOT have residency in a specific state? Would a visa and Italian lease agreement be enough proof to the state that I have not been residing in Virginia for the 2020 tax year?

Lastly, would income under the FEIE be exempt from any state tax in addition to federal taxes? Thanks so much for all your help and advice, this is a lot to learn about so I really appreciate it!

bgreat
Posts: 71
Joined: Tue Jun 25, 2019 11:48 pm

Re: Foreign Earned Income Exemption and U.S. 401k?

Post by bgreat » Sun Aug 11, 2019 1:48 pm

Make sure to check how Roth's are treated for Italian Tax purposes. They are a unique vehicle often not afforded any protection outside the US.

Be aware that any pre-tax to post-tax conversions could be subject to Italian tax if you are resident there.

I am unfamiliar with the Italian tax system, and similarly I'm unfamiliar with the United-States/Italy dual tax treaty. But this is something you want to figure out before performing operations that could be subject to tax in 2 countries.

anon_investor
Posts: 268
Joined: Mon Jun 03, 2019 1:43 pm

Re: Foreign Earned Income Exemption and U.S. 401k?

Post by anon_investor » Sun Aug 11, 2019 2:42 pm

Check with your employer if they are providing you tax equalization (company picks up tab for any taxes more than you would pay if you were just working in Virginia and not exempt from Fed taxes), tax protected (company pays any foreign taxes, you pay any Fed+state owed, which is better for you since you may be Fed tax emept), any other tax benefit (e.g. free tax prep services) or no tax benefit. This makes a big difference, since you will be subject to Italian taxes, not sure about Virginia (you may need to file but be exempt based on being outside for enough days in the year).

You likely would not be eligible for 401k, but the company many offer you something similar for expats (some of these have no investment options, e.g. just a flat annual % rate).

User avatar
Topic Author
Geographer
Posts: 33
Joined: Sun Jun 03, 2018 12:45 pm
Location: Virginia

Re: Foreign Earned Income Exemption and U.S. 401k?

Post by Geographer » Sun Aug 11, 2019 7:05 pm

Thanks guys. I think there's still a lot I need to find out from both the employer as well as maybe an expat tax adviser in Italy to figure out how the rules apply to this specific scenario so that I don't end up getting a huge penalty. I'll also be sure to have a tax professional file my taxes these next couple years because it could get quite complicated.

User avatar
Topic Author
Geographer
Posts: 33
Joined: Sun Jun 03, 2018 12:45 pm
Location: Virginia

Re: Foreign Earned Income Exemption and U.S. 401k?

Post by Geographer » Tue Aug 13, 2019 5:43 pm

So I'll still need to contact a tax professional to advise on the situation, but from HR and other employees it sounds like contributing to 401k PRE TAX is OK up to the $19k limit, since it's FEIE tax exempt going in and would be taxed going out anyways.

Would it even be worth it to put tax exempted money into a pre-tax 401k, where it'll be taxed at withdrawal? I mean, I plan to retire in a low income bracket, but still, this seems to throw away the benefit of earning the money tax-free. I'm still going to try to figure out if Roth 401k contributions can be done and hopefully a tax professional can examine my specific situation and figure it out.

Also, I'm hoping to take advantage of converting some traditional funds to roth and will need to find out how much room I'll have for that. Say I make $105k, which is also how much is exempted through FEIE. Would I then be able to convert up to $24k (married filing jointly standard deduction) in traditional funds to roth? Or is the standard deduction wiped out by the FEIE, and therefore taxing anything above $105k at the highest tax bracket -- 22%?

jminv
Posts: 962
Joined: Tue Jan 02, 2018 10:58 pm

Re: Foreign Earned Income Exemption and U.S. 401k?

Post by jminv » Tue Aug 13, 2019 6:20 pm

Geographer wrote:
Sun Aug 11, 2019 1:02 pm
Storamin wrote:
Sun Aug 11, 2019 2:14 am
Geographer wrote:
Wed Aug 07, 2019 2:52 pm
TedSwippet wrote:
Wed Aug 07, 2019 2:39 am
Also, note that if you are from Virginia (as suggested by your user profile), the state will tax your non-US income unless you take affirmative steps to completely terminate state domicile. From this article:
Ted -- thanks for the heads up on the Virginia domicile. We'll have sold our cars and will maintain residence in Europe for the entire 2020 calendar year, with no remaining assets or income in Virginia. The only thing we plan on keeping are our drivers licenses. Hopefully this exempts us from any Virginia state income tax.
https://www.artiopartners.com/blog/stat ... ax-expats/

Virginia is extremely difficult to terminate your domicile. Why keep your Drivers License? You can transfer them over to a European license, sometimes without a test, and then again when you move back.

Will you be on an expat assignment or a local contract? Is this your current employer? Who is handling the tax reporting and do you have access to them for tax planning?

Where to in Europe are you moving?
Good info, thanks for sharing. I'll be in Italy on a contract with a US company. We will be given Italian visas to authorize us to stay in the country for an extended time. I was also instructed to keep my stateside driver's license; and even renew it if it's nearing expiration. Since I'll still be a US Citizen, is it possible to NOT have residency in a specific state? Would a visa and Italian lease agreement be enough proof to the state that I have not been residing in Virginia for the 2020 tax year?

Lastly, would income under the FEIE be exempt from any state tax in addition to federal taxes? Thanks so much for all your help and advice, this is a lot to learn about so I really appreciate it!
You will need to move your drivers licenses to a friendly state if you don't want to transfer to a European drivers license. Also, if your voters registration is in Virginia, suggest you send in notice to the secretary of state that you moved. You need to make every effort to have no connection at all to Virginia. It is possible to not have residency in a specific state but the states that make it very difficult for expats are ones that essentially don't consider you to have moved unless you first move to another state. A foreign visa and lease alone will not necessarily get you out of it. My company required us to use their big 4 audit firm for personal returns and I got caught up in this, had to file a state return for one year (not Virginia). Ended up having to go back to the usa on vacation and get a license in a different state (I had to keep a US drivers license and this is what the big 4 partner told me to do at the time, same with cancelling my state voters registration, had completely forgotten about it). I don't think it would have been a problem if I had been allowed to do the return myself but who knows, it's true there are cases of these states coming after expats for tenuous connections.

User avatar
Topic Author
Geographer
Posts: 33
Joined: Sun Jun 03, 2018 12:45 pm
Location: Virginia

Re: Foreign Earned Income Exemption and U.S. 401k?

Post by Geographer » Tue Aug 13, 2019 6:35 pm

jminv wrote:
Tue Aug 13, 2019 6:20 pm
You will need to move your drivers licenses to a friendly state if you don't want to transfer to a European drivers license. Also, if your voters registration is in Virginia, suggest you send in notice to the secretary of state that you moved. You need to make every effort to have no connection at all to Virginia. It is possible to not have residency in a specific state but the states that make it very difficult for expats are ones that essentially don't consider you to have moved unless you first move to another state. A foreign visa and lease alone will not necessarily get you out of it. My company required us to use their big 4 audit firm for personal returns and I got caught up in this, had to file a state return for one year (not Virginia). Ended up having to go back to the usa on vacation and get a license in a different state (I had to keep a US drivers license and this is what the big 4 partner told me to do at the time, same with cancelling my state voters registration, had completely forgotten about it). I don't think it would have been a problem if I had been allowed to do the return myself but who knows, it's true there are cases of these states coming after expats for tenuous connections.
So even if income is exempt from taxes through the FEIE, Virginia can still tax the full income? They don't recognize FEIE?

We don't own any property and we're selling the car before moving... so really it would just be switching drivers licenses, voting registration, and changing the addresses on our bank accounts. Can this easily be done by getting a mail forwarding address in Florida?

User avatar
Hyperborea
Posts: 818
Joined: Sat Apr 15, 2017 10:31 am
Location: Japan

Re: Foreign Earned Income Exemption and U.S. 401k?

Post by Hyperborea » Tue Aug 13, 2019 7:16 pm

Geographer wrote:
Tue Aug 13, 2019 5:43 pm
So I'll still need to contact a tax professional to advise on the situation, but from HR and other employees it sounds like contributing to 401k PRE TAX is OK up to the $19k limit, since it's FEIE tax exempt going in and would be taxed going out anyways.
Even if you can contribute to it and it's pre-tax for US taxes, how is it going to be treated for Italian taxes? It's highly unlikely that Italy won't tax that money. So, on your 401k contributions you'll pay Italian taxes on the way in and US taxes on the way out.
It’s hard to win an argument with a smart person, it's damn near impossible to win an argument with a stupid person. - Bill Murray

User avatar
Topic Author
Geographer
Posts: 33
Joined: Sun Jun 03, 2018 12:45 pm
Location: Virginia

Re: Foreign Earned Income Exemption and U.S. 401k?

Post by Geographer » Tue Aug 13, 2019 7:27 pm

Hyperborea wrote:
Tue Aug 13, 2019 7:16 pm
Geographer wrote:
Tue Aug 13, 2019 5:43 pm
So I'll still need to contact a tax professional to advise on the situation, but from HR and other employees it sounds like contributing to 401k PRE TAX is OK up to the $19k limit, since it's FEIE tax exempt going in and would be taxed going out anyways.
Even if you can contribute to it and it's pre-tax for US taxes, how is it going to be treated for Italian taxes? It's highly unlikely that Italy won't tax that money. So, on your 401k contributions you'll pay Italian taxes on the way in and US taxes on the way out.
Good question -- from what I understand, the income will not be taxed by Italy due to an international agreement.

TedSwippet
Posts: 2370
Joined: Mon Jun 04, 2007 4:19 pm

Re: Foreign Earned Income Exemption and U.S. 401k?

Post by TedSwippet » Wed Aug 14, 2019 2:54 am

Geographer wrote:
Tue Aug 13, 2019 7:27 pm
Hyperborea wrote:
Tue Aug 13, 2019 7:16 pm
Geographer wrote:
Tue Aug 13, 2019 5:43 pm
So I'll still need to contact a tax professional to advise on the situation, but from HR and other employees it sounds like contributing to 401k PRE TAX is OK up to the $19k limit, since it's FEIE tax exempt going in and would be taxed going out anyways.
Even if you can contribute to it and it's pre-tax for US taxes, how is it going to be treated for Italian taxes? It's highly unlikely that Italy won't tax that money. So, on your 401k contributions you'll pay Italian taxes on the way in and US taxes on the way out.
Good question -- from what I understand, the income will not be taxed by Italy due to an international agreement.
Looks to be okay if covered by article 18 para 6 of the US/Italy tax treaty. From its technical explanation:
Subparagraph 6(a) allows for the deductibility (or excludibility) in one State of contributions to a plan in the other State if certain conditions are satisfied. Subparagraph 6(a) also provides that contributions to the plan will be deductible for purposes of computing the employer's taxable income in the State where the individual renders services to the extent allowable in that State for contributions to plans established and recognized under that State's laws.

In addition, the host-country competent authority must determine that the recognized plan to which a contribution is made in the home country of the individual generally corresponds to the plan in the host country. It is understood that United States plans eligible for the benefits of paragraph 6 include qualified plans under section 401(a), individual retirement plans (including individual retirement plans that are part of a simplified employee pension plan that satisfies section 408(k), individual retirement accounts, individual retirement annuities, section 408(p) accounts, and Roth IRAs under section 408A), section 403(a) qualified annuity plans, and section 403(b) plans. Paragraph 15 of Article 1 of the Protocol provides that, in the case of Italy, the pension plans eligible for the benefits of paragraph 6 include a “fondi pensione”.

Finally, the benefits under this paragraph are limited to the benefits that the host country accords under its law, to the host country plan most similar to the home country plan, even if the home country would have afforded greater benefits under its law. ...

User avatar
Topic Author
Geographer
Posts: 33
Joined: Sun Jun 03, 2018 12:45 pm
Location: Virginia

Re: Foreign Earned Income Exemption and U.S. 401k?

Post by Geographer » Wed Aug 14, 2019 4:38 pm

TedSwippet wrote:
Wed Aug 14, 2019 2:54 am
Looks to be okay if covered by article 18 para 6 of the US/Italy tax treaty. From its technical explanation:
Ted, thanks for finding this. So based on your interpretation, you'd say that pre-tax 401k contributions could be made? Not sure if this would also cover Roth 401k contributions.

TedSwippet
Posts: 2370
Joined: Mon Jun 04, 2007 4:19 pm

Re: Foreign Earned Income Exemption and U.S. 401k?

Post by TedSwippet » Wed Aug 14, 2019 5:27 pm

Geographer wrote:
Wed Aug 14, 2019 4:38 pm
TedSwippet wrote:
Wed Aug 14, 2019 2:54 am
Looks to be okay if covered by article 18 para 6 of the US/Italy tax treaty. From its technical explanation:
Ted, thanks for finding this. So based on your interpretation, you'd say that pre-tax 401k contributions could be made? Not sure if this would also cover Roth 401k contributions.
Sorry, all I know is what's shown above in the treaty technical explanation. It's similar to the UK one, which is why I knew where to look. However, I'm neither a US citizen nor an Italian resident, so I'm afraid this isn't my area.

QuantOfAsia
Posts: 43
Joined: Sun Apr 14, 2019 7:57 pm
Location: Hong Kong

Re: Foreign Earned Income Exemption and U.S. 401k?

Post by QuantOfAsia » Wed Aug 14, 2019 9:47 pm

Short answer: yes, your employer can set up and fund/let you fund a 401(k) plan whether you work inside or outside the US. 401k's are different from IRAs in how the FEIE impacts them because your employer is not expected to track the exclusion for each employee.

sawdust60
Posts: 232
Joined: Tue Jul 17, 2018 12:06 pm

Re: Foreign Earned Income Exemption and U.S. 401k?

Post by sawdust60 » Thu Aug 15, 2019 12:14 am

Geographer wrote:
Tue Aug 13, 2019 6:35 pm
jminv wrote:
Tue Aug 13, 2019 6:20 pm
You will need to move your drivers licenses to a friendly state ...
...

We don't own any property and we're selling the car before moving... so really it would just be switching drivers licenses, voting registration, and changing the addresses on our bank accounts. Can this easily be done by getting a mail forwarding address in Florida?
Drivers license will require proof of residency. Florida link

coldnose
Posts: 15
Joined: Thu Aug 25, 2016 2:08 am

Re: Foreign Earned Income Exemption and U.S. 401k?

Post by coldnose » Thu Aug 15, 2019 1:41 am

sawdust60 wrote:
Thu Aug 15, 2019 12:14 am
Geographer wrote:
Tue Aug 13, 2019 6:35 pm
jminv wrote:
Tue Aug 13, 2019 6:20 pm
You will need to move your drivers licenses to a friendly state ...
We don't own any property and we're selling the car before moving... so really it would just be switching drivers licenses, voting registration, and changing the addresses on our bank accounts. Can this easily be done by getting a mail forwarding address in Florida?
Drivers license will require proof of residency. Florida link
There are services in TX and elsewhere, set up for RVrs, that will let you use their address for your drivers license. I suggest contacting VA State and asking them exactly what you need to do to give up residence. They dogged me for years.

Also, be aware that under new tax law all moving costs (even for business) are taxable income. I suggest clarifying with your company that they will gross up to compensate.

User avatar
Topic Author
Geographer
Posts: 33
Joined: Sun Jun 03, 2018 12:45 pm
Location: Virginia

Re: Foreign Earned Income Exemption and U.S. 401k?

Post by Geographer » Thu Aug 15, 2019 2:16 pm

QuantOfAsia wrote:
Wed Aug 14, 2019 9:47 pm
Short answer: yes, your employer can set up and fund/let you fund a 401(k) plan whether you work inside or outside the US. 401k's are different from IRAs in how the FEIE impacts them because your employer is not expected to track the exclusion for each employee.
Thanks QuantOfAsia, do you know if this allows for both pre tax AND Roth 401k contributions?
coldnose wrote:
Thu Aug 15, 2019 1:41 am
Also, be aware that under new tax law all moving costs (even for business) are taxable income. I suggest clarifying with your company that they will gross up to compensate.
Yep, great point, they've already said they will provide a gross up on relocation taxes.

Post Reply