What is an IRA?
IRAs are US Personal Savings Plans (Investment Accounts) that provide different US tax advantages to provide additional financial security when you retire.
The most common IRAs are Traditional and Roth IRAs, which are subject to annual contribution limits based on your Taxable Compensation and Adjusted Gross Income.
- Traditional IRA Benefit: (Pre-Tax) Contributions may be tax deductible.
- Roth IRA Benefit: (Post-Tax) contributions are not deductible but qualified distributions may be tax free.
Read more about Traditional and Roth IRAs (IRS).
What Are IRA Contribution Limits
The IRS sets contribution limits for IRAs to ensure tax benefits are distributed fairly and prevent high-income earners from receiving disproportionate advantages. Your IRA contribution limit depends on your filing status, taxable compensation, and adjusted gross income (AGI). Based on these factors, you may qualify for the full limit, a reduced limit, or may not be eligible at all. See the IRS website for the latest IRA contribution limits.
Note that the Foreign Earned Income Exclusion (FEIE) could reduce your taxable compensation to zero, affecting IRA contributions.
How to add Roth IRA contributions
Join our founder, Nathalie, as she explains the process: IRA Contributions for Expats
Read more about IRA Contribution Limits for Expats.
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