US Retirement Accounts Abroad: What Each Tax Treaty Actually Says

Planning to retire abroad with a 401(k), an IRA, a Roth or Social Security? Which country taxes that money is decided by the tax treaty between the United States and your new home — and online answers about those treaties often contradict each other. This guide goes back to the treaty texts themselves, country by country, and shows what they actually say.

Who this guide is for: US citizens and green card holders who are retiring, or already retired, outside the United States, and the advisers who work with them.

What it covers: traditional 401(k) and IRA distributions, Roth IRAs, and US Social Security benefits, in the most popular retirement destinations for Americans, plus what changes when there is no treaty at all.

How to use it: start with the key concepts and the quick-reference table, then jump to your country. Each country chapter quotes the relevant treaty article, explains how the saving clause affects US citizens, and flags the most common misconceptions.

Our method: every rule in this guide is checked against a primary source — the treaty text and its Technical Explanation published by the US Treasury or the IRS, IRS publications, and Social Security Administration guidance. Where those sources leave a question open, we say so rather than guess.

Five concepts you need before reading any treaty

1. The pension article

Every US income tax treaty has an article on pensions, usually numbered between 17 and 20. It decides which country may tax pension payments — and whether the other country must hold back. For tax treaty purposes, IRA and 401(k) distributions are normally treated as pensions; the IRS's own guide to the Canada treaty, for example, says outright that pensions include payments from IRAs (IRS Pub. 597).

Watch the wording. "Taxable only in" a country gives that country an exclusive right. "May be taxed in" a country gives it a right that the other country can share.

2. The Social Security provision

Social Security is usually handled separately from private pensions, either in its own paragraph of the pension article or in a dedicated article. It often follows a different rule: some treaties give the right to tax to the country where you live, others to the country that pays.

3. The saving clause — the rule that changes everything for US citizens

Almost every US treaty contains a "saving clause" that lets the United States tax its citizens as if the treaty did not exist. This is why a treaty line saying your IRA is "taxable only" in Portugal does not, by itself, stop the IRS from taxing you as an American.

But each saving clause lists exceptions — provisions that apply to US citizens anyway. In the Canada treaty, for example, the Treasury's Technical Explanation lists paragraphs 1, 3, 4, 5(b) and 6(b) of the pension article as exceptions, which means those rules change US taxation of US citizens (Treasury Technical Explanation, US–Canada). The exceptions list is where the real answer for an American retiree lives.

4. The double tax relief article and the foreign tax credit

When both countries tax the same distribution, the treaty's relief article and the US foreign tax credit (Form 1116) decide who gives way. For US citizens, most treaties set an order: the country where you live taxes first, and the United States then credits the foreign tax against its own. The details of that order — which country credits which tax — vary from treaty to treaty and explain most of the confusion online.

5. Form 8833

If you take a position on your US return that relies on a treaty to reduce or eliminate US tax, you may need to disclose it on Form 8833, Treaty-Based Return Position Disclosure. There is an important waiver: IRS regulations exempt certain positions where a treaty reduces or modifies the taxation of pension or social security income. The IRS applied that waiver, for example, to exemptions claimed for French social security benefits (IRS Notice 2001-41, via Tax Notes). Check the Form 8833 instructions for your specific position; disclosing when in doubt costs little.

Quick-reference table for US citizens

This table summarizes the chapters below for a US citizen who is a tax resident of the country listed. In every case the United States keeps taxing 401(k) and IRA distributions under the saving clause; the table shows what the treaty adds.

Country	401(k) and traditional IRA	US Social Security	Roth IRA	Treaty article
Canada	Canada taxes as residence country; US also taxes	Taxable in Canada only (15% exempt); exempt from US tax for US citizens	Protected with a one-time treaty election, if no contributions while resident	Art. XVIII
Mexico	Mexico taxes as residence country; US also taxes	Taxable in the US only; Mexico cannot tax	No specific provision	Art. 19
United Kingdom	UK taxes periodic payments; US also taxes; lump sums from US plans reserved to the US	Taxable in the UK only; exempt from US tax for US citizens	Arguable exemption via Art. 17(1)(b); confirm	Art. 17
France	Taxable in the US only; France exempts (with a credit mechanism)	Taxable in the US only	Unsettled	Art. 18 (2004 protocol)
Germany	Germany taxes as residence country; US also taxes	Taxable in Germany only; exempt from US tax for US citizens	No specific provision	Art. 18
Portugal	Portugal taxes as residence country; US also taxes	Both may tax; US first, Portugal gives relief	No specific provision	Art. 20
Costa Rica, Panama	No income tax treaty: domestic law in each country plus the US foreign tax credit	US taxes under normal rules	Local law only	None

Canada: shared taxing rights and a real Roth solution

Bottom line: Canada taxes your 401(k) and IRA distributions as your country of residence, the United States keeps the right to tax them too, and US Social Security paid to a US citizen living in Canada is exempt from US tax.

401(k) and traditional IRA

Article XVIII(1) lets the country of residence tax pensions arising in the other country, but requires it to exempt any part that would be tax-free at source, such as a return of capital. Article XVIII(2) lets the paying country tax as well, capped at 15% of the gross amount for periodic pension payments; other pension payments, such as lump sums, can be taxed at source without that limit (Treasury Technical Explanation). The IRS's own guide to the treaty confirms that "pensions" include payments from IRAs, as well as Canadian RRSPs and RRIFs (IRS Pub. 597, via Tax Notes).

For a US citizen, the 15% cap does not limit the IRS: the saving clause lets the United States tax its citizens at regular rates. Canada taxes the distribution as your country of residence, and the treaty's double tax relief article together with Form 1116 is what prevents you from paying full tax twice.

US Social Security

This is where Canada is exceptionally favorable. US Social Security paid to a resident of Canada is taxable in Canada, which exempts 15% of the benefit (IRS Pub. 597, via Tax Notes). And the IRS lists Canada among the countries where US citizens who are residents are exempt from US tax on their benefits (IRS Pub. 915).

Roth IRA

Canada is the clearest case of a treaty that protects a Roth. Article XVIII(3)(b), added by the Fifth Protocol, treats a Roth IRA as a pension. With a one-time election under Article XVIII(7), filed with your first Canadian return as a resident, Canadian tax on the growth inside the account is deferred, and qualifying distributions remain exempt.

The trap is the "Canadian Contribution." Any contribution made while you are a Canadian resident splits the account: the balance immediately before that contribution keeps its protection, while new contributions and all later growth lose it. A conversion from a traditional IRA or a rollover from a traditional 401(k) counts as a Canadian Contribution; a rollover from another Roth IRA or a Roth 401(k) does not (Canada Revenue Agency, Income Tax Folio S5-F3-C1). The CRA has also stated that there is no mechanism to reverse a Canadian Contribution once made.

Common misconception

Myth: "Under the US–Canada treaty, 401(k) and IRA distributions are taxable only in the United States."

The text: the treaty gives Canada, as the country of residence, the right to tax them, and lets the United States tax at source as well, capped at 15% on periodic payments for non-citizens. It is Social Security, not your IRA, that is taxed in only one country.

Mexico: Mexico taxes your 401(k), the US keeps your Social Security

Bottom line: Mexico, as your country of residence, has the treaty right to tax your 401(k) and IRA distributions; US Social Security is taxable only in the United States, for residents of Mexico and for US citizens alike.

What the treaty says

The pension rules are in Article 19 of the US–Mexico treaty (not Article 18, as some guides state). Article 19(1) provides that (US–Mexico Convention, IRS):

"a) pensions and other similar remuneration derived and beneficially owned by a resident of a Contracting State in consideration of past employment by that individual or another individual resident of the same Contracting State shall be taxable only in that State; and

b) social security benefits and other public pensions paid by a Contracting State to a resident of the other Contracting State or a citizen of the United States shall be taxable only in the first-mentioned State."

The saving clause exceptions include paragraph 1(b) and paragraph 3 of Article 19 — but not paragraph 1(a).

What that means for a US citizen living in Mexico

• 401(k) and traditional IRA: Mexico may tax the distributions as your country of residence. The United States also taxes them, because the residence rule in 19(1)(a) does not override the saving clause.
• Who credits whom: the treaty's relief article tells Mexico to allow a credit only for the US tax that the United States could impose under the Convention, excluding tax charged solely because of citizenship. Since 19(1)(a) gives pensions to Mexico, Mexico taxes first and the United States then credits the Mexican tax on your Form 1116.
• US Social Security: taxable only in the United States. Mexico cannot tax it, but it remains taxable on your US return under normal rules — Mexico is not on the IRS list of countries where US citizens are exempt (IRS Pub. 915).

Roth IRA

The treaty has no Roth-specific provision. Whether Mexico treats a qualified Roth distribution as taxable income is a question of Mexican domestic law; confirm it with a Mexican tax adviser before you move large Roth balances into retirement income there.

Common misconception

Myth: "Under the US–Mexico treaty, pensions are taxed only where you live, so there is no double taxation."

The text: the residence rule protects non-citizens. US citizens remain taxable in the United States on their 401(k) and IRA distributions; double taxation is avoided through the foreign tax credit, not by exemption.

United Kingdom: residence rules, a lump-sum twist, and tax-free Social Security

Bottom line: the UK taxes your periodic 401(k) and IRA payments as your country of residence, the United States taxes them too because of the saving clause, US Social Security is taxable only in the UK, and a true lump sum from a US plan is reserved to the United States.

Periodic 401(k) and IRA payments

Article 17(1)(a) says pensions beneficially owned by a resident of one country are taxable only in that country. For a US citizen living in London, the UK therefore taxes periodic distributions. But 17(1)(a) is not among the saving clause exceptions, so the United States still taxes its citizens on the same payments, with the foreign tax credit coordinating the two.

Article 17(1)(b) adds a protection that does survive the saving clause: an amount that would be exempt from tax in the country where the plan is established, if you lived there, is also exempt in your country of residence. The Treasury's Technical Explanation lists subparagraph 1(b) and paragraphs 3 and 5 of Article 17 among the provisions that apply to all citizens and residents despite the saving clause (Treasury Technical Explanation, US–UK).

Lump sums: the paying country keeps them

Article 17(2) gives the country where the pension scheme is established the exclusive right to tax a lump-sum payment. In the US-to-UK direction, that means a genuine lump-sum distribution from a US plan to a UK resident is taxable only in the United States. In the other direction, the IRS has stated that because Article 17(2) is not a saving clause exception, the United States can still tax a US citizen or resident on a lump sum from a UK pension (IRS Information Letter 2008-0024).

Whether the UK's 25% tax-free pension commencement lump sum is a "lump sum" under 17(2), or a partial payment protected by 17(1)(b), is genuinely disputed among practitioners, and the IRS has issued no definitive published guidance on that specific question. If you take a position that it is exempt from US tax, disclose it on Form 8833.

US Social Security

Article 17(3) makes social security benefits taxable only in the country of residence, and it is a saving clause exception. The IRS confirms that US citizens who are residents of the United Kingdom are exempt from US tax on their benefits (IRS Pub. 915).

Roth IRA

The Roth question in the UK turns on Article 17(1)(b): if a qualified Roth distribution would be tax-free to a US resident, the UK should exempt it as well, provided the Roth counts as a "pension scheme" under the treaty. Many advisers take that position, but it rests on the treaty definition rather than on a Roth-specific provision like Canada's. Confirm it before relying on it, and keep records of your contributions.

Common misconception

Myth: "The treaty says pensions are taxable only where you live, so as a UK resident I pay no US tax on my 401(k)."

The text: Article 17(1)(a) is not a saving clause exception. US citizens remain taxable in the United States on periodic distributions; only Social Security and amounts covered by 17(1)(b) are protected from US tax for citizens.

France: the treaty everyone misquotes

Bottom line: under the current treaty, US Social Security and distributions from US pension and retirement plans paid to a resident of France are taxable only in the United States.

What the treaty actually says

The original 1994 treaty gave pensions to the country of residence. That article was deleted and replaced by a protocol signed on December 8, 2004, which entered into force on December 21, 2006 and applies to taxable periods beginning on or after January 1, 2007 (Protocol text, US Government Publishing Office).

The current Article 18(1) reads, in part:

"Payments under the social security legislation or similar legislation of a Contracting State to a resident of the other Contracting State, and pension distributions and other similar remuneration arising in one of the Contracting States in consideration of past employment paid to a resident of the other contracting State, whether paid periodically or in a lump sum, shall be taxable only in the first-mentioned State."

The "first-mentioned State" is the paying country. The same paragraph adds that a pension distribution arises in a country only if it is paid by a plan established there. So a 401(k) or a US Social Security check paid to someone living in Lyon is taxable only in the United States. The protocol also expressly lists 401(a) qualified plans, individual retirement accounts and annuities, SEP and SIMPLE IRAs, 403(a) and 403(b) plans as US arrangements that correspond to French retirement plans.

An IRS Chief Counsel memorandum from 2011 applies the same reading: pension distributions paid to a resident of France are taxable only in the United States and are exempt from tax in France (IRS Chief Counsel, 2011-0051).

The saving clause

Article 29(3)(a), as amended by the same protocol, lists paragraph 1 of Article 18 among the provisions the saving clause does not affect. For a US citizen this changes little on the US side — the United States taxes the distribution anyway, as the paying state — but it confirms that France must give way on these amounts.

How France handles it

France does not simply ignore the income. Its relief article generally takes exempt US income into account in computing the French rate on your other income, while granting a credit that cancels the French income tax on the US income itself. French social charges are a separate question, governed by EU and French social security rules rather than the income tax treaty; confirm your position with a French adviser.

Common misconception

Myth: "France taxes your IRA and 401(k) withdrawals as the country of residence."

The text: that was the 1994 rule. Since 2007, US pension distributions paid to French residents are taxable only in the United States. Guides that quote the old residence rule, or the 2001 IRS notice written under it, are describing a version of the treaty that no longer applies.

Open question: whether a Roth IRA distribution counts as a payment "in consideration of past employment" is not settled by the treaty text, since Roth contributions need not come from an employer plan. Rollovers from a Roth 401(k) are the strongest case. Treat this as a point to confirm before relying on French exemption.

Germany: residence rules and US-tax-free Social Security

Bottom line: Germany taxes your 401(k) and IRA distributions as your country of residence (and so does the United States, for citizens), while US Social Security paid to a resident of Germany is taxable only in Germany — including for US citizens.

Article 18(1) provides that pensions and similar remuneration paid to a resident in consideration of past employment are taxable only in the country of residence. Article 18(5) provides that social security benefits paid by one country to a resident of the other are taxable only in that other country, which must treat them as if they were its own social security benefits (German Federal Foreign Office).

The saving clause exceptions in the protocol cover paragraphs 3, 4 and 5 of Article 18 — but not paragraph 1 (2006 Protocol, US Treasury). The result for a US citizen living in Germany:

• 401(k) and IRA: taxed by Germany as country of residence and by the United States under the saving clause, with the foreign tax credit coordinating the two.
• US Social Security: taxable only in Germany. The IRS lists Germany among the countries where US citizens who are residents are exempt from US tax on their benefits (IRS Pub. 915).

Common misconception: some guides state that Social Security under this treaty is taxed only by the paying country. That was not the rule the 2006 protocol put in place: the current Article 18(5) gives the right to the country of residence.

Portugal: Social Security is taxed in both countries

Bottom line: Portugal taxes your 401(k) and IRA distributions as your country of residence; for US Social Security received by a US citizen living in Portugal, both countries may tax, with the United States taxing first.

Private pensions

Article 20(1)(a) of the 1994 treaty makes pensions paid in consideration of past employment taxable only in the country of residence. As in the other treaties above, this residence rule does not prevent the United States from taxing its citizens.

US Social Security — the most misreported point in this guide

Article 20(1)(b) says that social security benefits paid by one country to a resident of the other, or to a US citizen, "may be taxed" in the paying country — not "only". The IRS has spelled out the consequence: if the recipient is a resident of Portugal who is also a US citizen, both countries may tax the benefits; the United States keeps the primary right, and Portugal must relieve double taxation by allowing a deduction for the tax paid to the United States (IRS Chief Counsel, Information Letter 2015-0045).

Online guides get this wrong in both directions. Some say Social Security is taxable only in Portugal and that the IRS stops taxing it once you move; others say it is taxable only in the United States and that Portugal cannot touch it. Neither matches the treaty text as the IRS reads it. Portugal is also not on the IRS list of countries where US citizens are exempt (IRS Pub. 915).

Roth IRA

The Portugal treaty has no Roth-specific provision; Portuguese treatment of Roth distributions is a domestic-law question to confirm locally.

No treaty at all: Costa Rica and Panama

Two of the most popular retirement destinations for Americans have no income tax treaty with the United States: neither appears on the IRS list of treaty countries (IRS, United States income tax treaties – A to Z).

Without a treaty, there is no pension article, no Social Security article and no saving clause to analyze. Each country simply applies its own law:

• The United States taxes your 401(k), IRA and Social Security under its normal domestic rules, exactly as if you lived in the United States.
• The local country taxes them only if its own law reaches that income. Both Costa Rica and Panama are generally described as taxing on a territorial basis, which would leave foreign-source retirement income outside their tax net — but residency programs and local rules change, so confirm the current position with a local adviser.
• Double taxation, if it arises, is relieved only by the US foreign tax credit under domestic law. There is no treaty mechanism to fall back on, and no competent authority procedure if the two countries disagree.

The practical upshot: in a no-treaty, territorial country, the simplest outcome is often that only the United States taxes your retirement income. But that conclusion depends entirely on local law, not on any treaty protection.

Step by step: what to do before you move, and every year after

Before you move

1. Find the current treaty text, not a summary. Use the IRS treaty list and the Treasury's treaty page, and check for later protocols. The France example shows how a protocol can reverse the original rule.
2. Read three provisions together: the pension article, the Social Security provision, and the saving clause with its list of exceptions.
3. Decide Roth moves early. In Canada, a Roth conversion or contribution made after you become resident can permanently reduce the treaty protection. Make conversions before you move if that is your plan.
4. Model the order of taxation. For each income stream, write down which country taxes first and which one gives a credit. This is what determines your real tax bill.
5. Check local law on anything the treaty does not cover, such as Roth distributions in Mexico, Germany or Portugal, and local social charges.

Every year after

1. File your US return reporting worldwide income, including every 401(k) and IRA distribution and your Social Security.
2. Claim the foreign tax credit on Form 1116 for foreign tax paid on retirement income, consistent with the treaty's order of taxation.
3. Check whether Form 8833 is required when you rely on a treaty to reduce US tax. Some pension and Social Security positions fall under a disclosure waiver; others, such as claiming that a UK pension lump sum is exempt, are best disclosed.
4. Keep up with foreign account reporting (FBAR and Form 8938) for accounts in your new country.
5. Re-check the rules when something changes: a new protocol, a move to another country, a lump-sum withdrawal, or an inherited account.

Frequently asked questions

Does a tax treaty stop the IRS from taxing my 401(k) if I live abroad?

Usually not, if you are a US citizen. The saving clause lets the United States tax its citizens as if the treaty did not exist, and the private pension rule is rarely on the list of exceptions. In France, the United States is the only country with the right to tax US pension distributions; elsewhere, both countries generally tax and the foreign tax credit prevents full double taxation.

In which countries is my US Social Security exempt from US tax?

The IRS lists Canada, Egypt, Germany, Ireland, Israel, Italy (only if you are also an Italian citizen), Romania and the United Kingdom as countries where US citizens who are residents are exempt from US tax on their benefits (IRS Pub. 915).

Will my Roth IRA stay tax-free abroad?

In the United States, yes, if the distribution is qualified. Abroad, it depends. Canada protects Roth IRAs through a specific treaty election; the UK position rests on a general treaty rule; in most other countries it comes down to local law.

Can I avoid US tax by taking a lump sum before I move?

A lump sum taken while you are a US resident is simply taxed in the United States. After you move, some treaties treat lump sums differently from periodic payments — the UK treaty reserves lump sums from US plans to the United States, and the Canada treaty does not cap US source tax on them. Model both options before deciding.

Why do online guides disagree so much?

Three common reasons: they quote an outdated version of the treaty (France before 2007), they read "taxable only" without checking the saving clause, or they confuse "may be taxed" with "taxable only" (Portugal's Social Security rule).

Ask about your own situation

Treaty answers turn on details: your citizenship, your residence under the treaty's tie-breaker rules, the type of account, and whether you take payments periodically or as a lump sum. TaxLatitude answers from the treaty text, the Internal Revenue Code and IRS guidance, cites each source and lists what it could not confirm. For example:

"I'm a US citizen retiring to Portugal next year with a traditional IRA, a Roth IRA and Social Security. Which country taxes each one under the treaty, and in what order?"

Methodology and primary sources

Every rule in this guide was checked against the following primary sources in October 2026. Treaties and IRS guidance change; check for newer protocols before relying on any rule.

Treaty texts and official explanations

• US–Canada: Treasury Technical Explanation
• US–France: Protocol of December 8, 2004 (US Government Publishing Office)
• US–Germany: Protocol of June 1, 2006 (US Treasury) and Article 18 text (German Federal Foreign Office)
• US–Mexico: Convention text (IRS)
• US–Portugal: Convention of September 6, 1994 (US Treasury)
• US–UK: Treasury Technical Explanation

IRS publications and guidance

• IRS Publication 915, Social Security and Equivalent Railroad Retirement Benefits
• IRS Chief Counsel memorandum 2011-0051 (France)
• IRS Information Letter 2015-0045 (Portugal)
• IRS Information Letter 2008-0024 (UK lump sums)
• IRS, United States income tax treaties – A to Z

Foreign government guidance

• Canada Revenue Agency, Income Tax Folio S5-F3-C1, Taxation of a Roth IRA

IRS Publication 597 and Notice 2001-41 are cited through their reproduction on Tax Notes.

This guide is general information, not tax or legal advice. Treaty application depends on your individual facts, and local law in your country of residence can change the outcome. Consult a qualified cross-border tax professional before acting.