Roth IRA eligibility & U.S. citizens abroad

[Guest williamsteih]

Background -

A U.S. domiciled mission organization sponsors a 403(B) plan for their employees, 10% of which reside in the U.S., while the remaining 90% are dispersed throughout God's green earth.

The question regards Roth eligibility -

What determines eligibility as it relates to country of residence?

It seems to follow that if a person is exempt from paying U.S. income tax as a result of their "overseas" status they

would also be disallowed from the Roth IRA as an option.

Which raises another question of whether the sponsoring organization of the 403(B) can make "pre-tax" contributions

for someone who is not subject to income tax.

Thoughts??? Specific references/citations to IRC would be appreciated.

Thanks,

[IRC401]

The US taxes worldwide income, although depending on facts and circumstances, a US citizen stationed overseas may not owe any US taxes.

If the individual has wages that are taxable in the US (even if no tax is due), he should be eligible for 403(B) contributions. I haven't checked whether a different rule would apply for IRAs, but I'm not aware of any reason why the rules would be different. NB: 403(B) or IRA contributions may be taxable by the foreign country.