If you moved to Germany with an IRA or a Roth IRA, one question comes up quickly: do you keep paying into it? The answer depends on three things: whether you can still contribute under US rules, how Germany treats the account, and what else your money could do.
This guide covers the US conditions, what the US-Germany tax treaty does, why a Roth IRA is not automatically tax-free in Germany, and the questions that decide it. Rules checked as of October 2026.
If you are still planning the move, see our guide for US freelancers moving to Europe. Registering your address generally makes you a German tax resident from that date, so the timing matters. See how to register your address in Germany.
Can you still contribute from Germany?
Contributing requires US taxable compensation. For a Roth IRA, your income must also be under the limit.
For 2026:
•Contribution limit: $7,500, or $8,600 if you are 50 or older.
•Roth income phase-out: $153,000 to $168,000 for single filers and $242,000 to $252,000 for married couples filing jointly.
The exclusion trap. Income you exclude under the Foreign Earned Income Exclusion (FEIE) does not count as compensation for an IRA. The 2026 exclusion is $132,900. If you exclude all your earned income, you have nothing to contribute from.
Illustrative example: you earn $138,000 and exclude $132,900. Only $5,100 remains as compensation, so your contribution is capped at $5,100.
Claiming the foreign tax credit instead keeps the income in your compensation. That choice affects far more than your IRA, so make it with a US adviser. Excluded amounts are also added back when testing the Roth income limit, so a low taxable income does not guarantee eligibility.
What the US-Germany treaty does and does not do
Three separate questions get mixed up here:
1. Growth inside the account. Under Article 18A of the treaty, Germany generally does not tax income earned inside a recognised US plan until it is paid out. Roth IRAs are named in the treaty Protocol.
2. New contributions. Germany gives no deduction for Roth IRA contributions, and Roth IRAs are excluded from the automatic German recognition that other US plans receive. For personal contributions to a traditional IRA, a Munich court allowed a deduction in one case. The appeal at the Federal Fiscal Court (BFH) is still pending as of October 2026, so do not rely on it.
3. Payouts. As your country of residence, Germany can tax distributions. US citizens also remain taxable in the US under the saving clause. Double taxation is relieved through credits, which are not automatic.
Is a Roth IRA tax-free in Germany?
Not automatically. A qualified Roth distribution is generally tax-free in the US after five years and age 59½. The German treatment is a separate question.
•No BFH ruling on Roth IRA distributions. The BFH has ruled on 401(k) payouts, and the pending IRA case concerns traditional IRA contributions. Neither settles the Roth position.
•A commonly applied view: only the earnings portion is taxed, as other income under § 22 Nr. 5 EStG at progressive rates, not at the flat investment rate. This is not settled, and practitioners report tax offices treating Roth accounts like traditional ones.
•A 2025 change: the Annual Tax Act 2024 extended § 22 Nr. 5 EStG to cover comparable relief granted abroad on contributions. Payouts derived from relieved contributions, as with a traditional account, can be fully taxable. Roth contributions start from a different position because they received no relief.
Illustrative example: a Roth IRA is fully paid out at the equivalent of €100,000, and recognised contributions are €60,000. If difference-based taxation applies, €40,000 is a possible taxable amount. That is not the tax payable. The result depends on how the plan is classified and on the German rules for the specific payout.
What changes for your US filing
•US citizens remain subject to US tax while living in Germany, so you keep filing US returns.
•Your filing choice shapes your IRA room. The FEIE and the foreign tax credit lead to different contribution limits.
•Moving does not reset your basis. The account value on arrival is not automatically your new contribution basis.
•Keep your records. Contribution history, conversions and Forms 5498, 8606 and 1099-R matter, and German calculations are made in euros.
•German payouts are reported in Germany. Anlage R-AUS is generally the relevant schedule when § 22 Nr. 5 EStG applies.
•German accounts may add US reporting duties (FBAR or Form 8938), depending on balances.
Should you keep contributing? The questions that decide it
•Can you contribute at all? You need compensation that is not excluded, and your income must be under the Roth limit.
•How long will you stay in Germany? The longer you stay, the more the German treatment of payouts matters.
•Which filing method will you use? The FEIE or the foreign tax credit.
•What is the alternative? German-recognised retirement products can receive German tax relief that IRA contributions generally do not. Taxable investing is another route. Each has its own rules.
•Can you document everything? Contributions, conversions and values on arrival are needed years later.
Three illustrative scenarios
An employee whose full salary is excluded under the FEIE. No compensation remains, so no contribution is possible. Electing the foreign tax credit would keep the income in compensation, but that choice has wider consequences.
A founder with income above the Roth limits. Direct Roth contributions stop once income passes $168,000 (single) or $252,000 (joint). Routes such as conversions need separate German analysis, because the treaty’s transfer rule gives no blanket answer.
A long-term German resident with no plan to return to the US. The German taxation of payouts is likely to matter more over time. It is worth weighing the IRA against the German-recognised options.
Common mistakes
•Contributing from excluded income. It creates an excess contribution that has to be corrected.
•Assuming “tax-free in the US” means “tax-free in Germany”.
•Expecting a German deduction for IRA contributions. Roth contributions get none, and the traditional IRA question is still before the BFH.
•Applying a 401(k) ruling to a Roth IRA. The courts treat the arrangements as different.
•Converting a traditional IRA to a Roth without checking the German side. There is no blanket assurance of tax neutrality.
•Not documenting the arrival value and contribution history.
Where the details matter
Your filing method, account type, conversion history and plans for payouts all interact, and your own numbers decide the answer. This is where the details matter, and where a general article stops being enough.
Frequently asked questions
What is the IRA contribution limit in 2026? $7,500, or $8,600 if you are 50 or older. Roth contributions are also subject to income limits.
Can I contribute if I use the FEIE? Only from compensation that is not excluded. If the exclusion covers all your earned income, you cannot contribute.
Does Germany tax the growth inside my Roth IRA every year? Generally not. Under Article 18A(1) of the treaty, income inside a recognised plan is taxed when it is paid out, if the conditions are met.
Has the BFH ruled on Roth IRAs? No. The rulings reviewed concern 401(k) payouts and traditional IRA contributions.
Does moving to Germany reset my Roth IRA basis? Not automatically. Document the value on arrival, but it does not replace your contribution history.
The bottom line
Whether to keep contributing depends on three things: your US eligibility, how Germany treats the account, and what the alternatives are. The US side is clear. The German treatment of a Roth IRA is not settled, so it should not be treated as tax-free in Germany.
If you are a freelancer or director in Germany weighing retirement savings against how your income and company are structured, Richmond Blackwood can look at the German and Irish side of your setup. Evaluate your savings.
Disclaimer
This article is for general informational purposes only and does not constitute tax, legal or investment advice. Cross-border retirement account rules are complex, depend on your citizenship, residency and filing choices, and change. Figures are illustrative or sourced as stated. Richmond Blackwood Limited is authorised as a Trust or Company Service Provider and does not provide investment advice or regulated financial services. Always take advice from a qualified professional with US and German expertise
