401(k), IRA and Roth accounts for US citizens living in France

If you are American and live in France, you normally file a tax return in both countries. Before you withdraw from a 401(k), IRA or Roth account, or move money between them, we establish what the France-US treaty says and what you have to declare.

US citizenship or tax-resident status can create US obligations alongside those of a resident of France. Retirement payments need their own treaty analysis. Article 18 of the France-US convention, as amended, addresses qualifying pensions and similar remuneration, including periodic payments and single payments of the whole pot, known as lump sums. Do not apply a general investment-income rule before checking whether that provision governs the payment.

In short

For a US citizen in France, a 401(k) or traditional IRA distribution is examined under the amended France-US treaty, which can allocate taxation of qualifying pension payments to the United States, before article 163 bis and other French rules apply.
A Roth withdrawal and a Roth conversion are different operations; the US Treasury’s explanation of the 2004 protocol discusses Roth IRAs within the pension provisions, so the lack of a French equivalent does not mean the treaty gives no answer.
A distribution taken in the year of arrival, when that year is split between a non-resident and a resident period, may be taxed differently from one taken a year later; establish the tax date of the payment in each country before instructing the plan administrator.
US filing obligations can continue while you live in France and depend on your status and the applicable filing rules; French reporting is assessed from the retirement arrangement’s documents, and this firm does not provide US tax advice.

Distributions from a 401(k) or a traditional IRA

Identify the type of plan, its legal status and the proposed distribution. The amended treaty can allocate the right to tax qualifying US pension payments to the United States. This must be examined before applying French domestic rules such as article 163 bis. The French return may still require information even where the treaty prevents a second tax charge.

The timing may matter more than the headline rate. A large distribution taken in the year of arrival, when the year is split between two residence periods, does not land in the same place as the same distribution taken a year later. That is a decision to take before instructing the plan administrator.

Roth accounts and conversions

A Roth withdrawal and a conversion into a Roth are different operations. The US Treasury’s explanation of the 2004 protocol expressly discusses Roth IRAs within the pension provisions. The absence of an equivalent French product is therefore not enough to conclude that the treaty gives no answer. Check the account, the transaction and the relevant treaty conditions with the advisers preparing both returns.

The practical consequence is that a Roth conversion planned around a move to France should be modelled on both sides before it is executed, and that the position taken on the French return should be documented at the time rather than reconstructed later if it is questioned.

Investment access and US reporting

A French institution may restrict the services it offers to US persons. Investments outside the United States can also raise PFIC and reporting questions. Their treatment depends on the fund and the way it is held; retirement accounts should not automatically be treated like ordinary investment accounts. Coordinate the review with a US tax adviser before changing holdings.

Reporting, on both sides

US filing obligations depend on status and the applicable filing rules, and can continue while you live in France. French reporting must also be assessed from the retirement arrangement’s documents. Keep the conclusions for each return, rather than treating an additional declaration as automatically harmless or an omission as automatically exempt.

The interaction between US and French taxation requires a coordinated reading of both systems, and this page does not attempt to resolve it. It describes general mechanisms only. US filing obligations, including any reporting of foreign accounts and assets, must be handled by a professional authorised in the United States; this firm does not provide US tax advice and does not replace a US preparer. No position described here should be adopted on a return without being verified against the treaty text and the client’s own documents.

References cited

CGI, art. 163 bis

Frequently asked questions

Will I be taxed twice on a 401(k) distribution if I live in France?

The treaty has specific pension provisions that may allocate taxation of a qualifying US payment to the United States. Check article 18 as amended and the plan documents before applying a general tax-credit explanation. Reporting and the effect on other income require separate consideration.

Is a Roth IRA tax free in France?

The account and the payment must be checked against the treaty. Roth IRAs are expressly discussed in the US Treasury’s explanation of the 2004 protocol, so the absence of a French equivalent does not settle the issue. A qualified distribution, an early payment and a conversion must be analysed separately.

Should I take a lump sum before or after moving to France?

Compare the proposed distribution before and after the transfer of residence, using the plan documents and the applicable treaty. The year of arrival is split between a non-resident period and a resident one; establish the tax date for that payment in each country, then calculate the result in both before instructing the plan administrator, because once the payment is made the facts are fixed.

Can I invest in French funds through my French accounts as a US person?

Some French funds can create PFIC taxation and reporting obligations in the United States. The fund and the account holding it must both be examined. The answer should not be reduced to a blanket claim that all French investments are unsuitable.

Do I still have to file in the United States while living in France?

US filing requirements can continue after a move to France. Whether a particular return or disclosure is required depends on your tax status and the applicable thresholds and rules. Coordinate your French and US filings with the professionals handling them.

ÉTHIQUE ET PATRIMOINE, a French simplified joint-stock company (SAS), registered office at 41 rue Saint-Ferdinand, 75017 Paris, France, Paris Trade Register no. 803 414 796, VAT no. FR 40 803 414 796, registered with ORIAS under number no. 24001817 (www.orias.fr) — Financial investment adviser (CIF) no. 18002418, member of ANACOFI-CIF, a professional association approved by the Autorité des marchés financiers, and Anacofi-Courtage for its brokerage activity. Presence: Paris, Montpellier, London, Singapore, Hong Kong, Bangkok, Shanghai and Dubai.

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