Required Minimum Distributions While Living Abroad

Required Minimum Distributions (RMDs) must begin at age 73 from Traditional IRAs, most employer plans, and inherited retirement accounts, regardless of where you live. There is no exception to RMDs for living abroad: you must calculate and withdraw the minimum amount each year or face a 25% excise tax on the amount you should have taken but did not. RMD distributions are taxable as ordinary income on your US return, and if you live in a country with no tax treaty protection for IRA distributions, they may also be taxable locally in the year received. In countries where a treaty applies, you may be able to avoid local taxation on IRA distributions, or have them taxed only in the US: the US-UK treaty generally provides that IRA distributions are taxable only in the country where the recipient is resident. Roth IRA accounts are not subject to RMDs during the owner's lifetime, which is one reason some expats pursue Roth conversions during years spent abroad when their US taxable income is low.