401k, IRA and Social Security When Retiring in Europe (2026)

If you retire in Europe, your 401(k), IRA and Social Security can be taxed by the US, by your new country, or by both. The tax treaty decides which. The US taxes its citizens on worldwide income wherever they live, and most European countries tax their residents too.

Good expatriate financial planning starts with that question. You can keep your US accounts, and Social Security keeps paying in almost every European country. In France, only the US taxes Social Security and traditional 401(k) and IRA withdrawals. In Spain and Portugal, those withdrawals are taxed locally, and Social Security can be taxed by both countries with a credit. The Roth IRA is the big unknown, because most treaties never mention it.

Key facts at a glance

Here are the rules American retirees ask about most, as of November 2026. The rest of this guide explains each one.

Question	Short answer (as of November 2026)
Does the foreign earned income exclusion cover pensions or Social Security?	No. It covers only wages for work done abroad.
Can I collect Social Security while living in Europe?	Yes, if you are a US citizen living where SSA can send payments. Belarus is the main European exception. SSA also generally cannot pay in Azerbaijan or Kazakhstan.
Which countries exempt US citizen residents from US tax on Social Security?	Canada, Egypt, Germany, Ireland, Israel, Italy (Publication 915 says you must also be an Italian citizen), Romania and the UK.
France	Only the US taxes US Social Security and traditional 401(k) and IRA distributions.
Spain	401(k) and IRA withdrawals are taxed at ordinary rates. Most current guidance says Social Security is taxed by both countries, with Spain crediting the US tax.
Portugal	401(k) and IRA withdrawals are taxed in Portugal. Most current guidance says Social Security is taxed by both countries, with Portugal crediting the US tax.
Roth IRA	Unsettled. A Roth that is tax-free in the US can still be taxed in Europe.
Medicare abroad	Generally no coverage outside the United States.
Totalization agreements	31 in force. The newest, with Romania, took effect on 1 September 2026.
WEP and GPO	Repealed by the Social Security Fairness Act, signed 5 January 2025.

Can I keep my 401k and IRA abroad?

Yes. Moving to Europe does not close your 401(k) or IRA, and the money can stay invested in the US. What changes is the tax on withdrawals, because you now live in a second country that may also want to tax them.

The US taxes citizens and green card holders on worldwide income wherever they live, according to Tax Samaritan. Many European countries also tax residents on worldwide income, including US retirement distributions, as Cerity Partners explains. So one withdrawal can face two tax systems.

Relief comes from two places: the US foreign tax credit and the income tax treaty with your new country. Start your planning by reading that treaty, not by looking at the account. For the bigger picture, see our guide to expat financial planning in Europe.

How are US pensions taxed in Europe?

The US taxes your 401(k) and IRA withdrawals in every case, and your European country of residence usually taxes them too, unless the treaty says otherwise. You avoid paying twice through the foreign tax credit or a treaty position.

The foreign earned income exclusion does not help here

The FEIE covers only wages for work done abroad. It does not apply to Social Security, pensions or IRA and 401(k) withdrawals, according to Tax Samaritan. If you still earn some wages from part-time remote work, test those with our FEIE calculator. Your retirement income needs the foreign tax credit or a treaty instead.

The saving clause limits most treaty benefits

US tax treaties contain a "saving clause" that lets the US keep taxing its own citizens, with listed exceptions. Taxes for Expats advises checking the exact treaty article before you leave any income off your US return, and notes that some treaty positions must be disclosed on Form 8833.

The UK shows how this works. Under the US-UK treaty, a private UK pension can be taxable only in the UK for a UK resident, but you still report it on your US return and claim the treaty position on Form 8833, according to Greenback Expat Tax Services.

How do I claim the foreign tax credit and Form 8833?

You claim the foreign tax credit on Form 1116, which subtracts foreign income tax from the US tax on the same income. There is a catch for retirees: IRA and 401(k) distributions are US-source income, so the normal credit limit allows little or no credit for European tax on them. The credit usually works only through the treaty's re-sourcing rule, which needs a separate Form 1116 for treaty-resourced income (see the IRS Instructions for Form 1116) and often a Form 8833 disclosure. Hand this step to a cross-border preparer.

Totalization agreements are a different thing

A totalization agreement decides which country's Social Security or payroll tax applies to your work. It does not decide how your benefits are taxed as income. The income tax treaty does that, as Tax Expert Today points out.

The treatment depends on the country, and the differences are large. France leaves most US retirement income to the US. Spain and Portugal tax 401(k) and IRA withdrawals as local income.

Country	US Social Security	401(k) and traditional IRA	Roth IRA
France	Only the US taxes it (treaty Article 18)	Only the US taxes it. France gives a credit but counts it for your rate (see FAQ).	Treaty is silent. France may tax it.
Spain	The US can tax it (Art. 20(1)(b)). Most current guidance says Spain also taxes it as residence income, with a credit for US tax. A minority say it is exempt in Spain.	Taxed at progressive ordinary-income rates. The Beckham Law does not cover retirees.	Unsettled. Newer sources treat it as ordinary income.
Portugal	The US can tax it (Art. 20(1)(b)). Most current guidance says Portugal also taxes it as your residence country, with a credit for US tax (Art. 25). A minority of sources say only the US taxes it.	Taxed in Portugal for tax residents	Usually taxed in Portugal unless you hold legacy NHR status
Germany	US citizen residents exempt from US tax (Pub 915)	Check the treaty article	Check the treaty article
Italy	Exempt from US tax (Publication 915 says you must also be an Italian citizen)	Check the treaty article	Check the treaty article

Treaty readings differ and rules change. Confirm your position with the IRS, the local tax authority (Finanças, AEAT, DGFiP) or a cross-border tax adviser before you withdraw.

Sources: France from Skybound Wealth USA, Spain withdrawals from Aelos, Portugal withdrawals from GrowInPortugal, and Germany and Italy from IRS Publication 915.

In Spain, usually yes. Article 20(1)(b) of the US-Spain treaty says Social Security "may be taxed" by the US, which is not exclusive. Most current guidance says Spain also taxes it as your residence country and gives a credit for the US tax under the treaty's double-tax relief article, as Moving to Spain explains. A minority of advisers argue it is exempt in Spain, and that source notes the question is contested in the Spanish courts, so confirm your case with a Spanish tax adviser.

Portugal's treaty uses the same "may be taxed" wording in Article 20(1)(b). Most current adviser guides say Portugal can tax it as your residence country with a credit for US tax under Article 25. See the US-Portugal treaty guides from Taxes for Expats and Greenback Expat Tax Services. A minority, including GrowInPortugal, say only the US taxes it.

US citizens living in Canada, Egypt, Germany, Ireland, Israel, Italy, Romania or the UK are exempt from US tax on US Social Security under treaties listed in IRS Publication 915. For Italy, Publication 915 says you must also be an Italian citizen. If you are exempt, SSA will not withhold US tax.

If you earn a European pension, the reverse matters. Foreign social security benefits are taxable in the US as annuities unless a treaty exempts them or treats them as US benefits. Under the Canada and Germany treaties, their social security paid to US residents is treated as if paid under US law, per Publication 915.

Is my Roth IRA still tax-free in Europe?

Not reliably. A qualified Roth withdrawal is tax-free in the US, but your European country may still tax it. Roth IRAs were created in 1997, after most treaties were signed, and only a few treaties mention them, as Cerity Partners notes.

Roth IRA in France

The US-France treaty and its technical explanations do not address Roth distributions or Roth conversions, according to Skybound Wealth USA. The French law firm Kohen Avocats warns that the treaty's pension rule looks at where you live, not the US tax wrapper, so France may tax a Roth withdrawal. Rook CPAs says Roth distributions typically stay tax-free if documented. We found no French tax authority guidance that settles it.

Roth IRA in Portugal and Spain

Portugal usually gives no tax break for Roth withdrawals unless you hold legacy NHR status, according to GrowInPortugal. For Spain, an older adviser view said Roth withdrawals were not taxable, but newer sources treat them as ordinary income. Treat the Roth as unsettled in both countries.

What this means for a Roth conversion

The France treaty is silent on conversions too. A conversion done while you are a French or Portuguese tax resident may be treated differently from one done while you still live in the US. Get written advice on timing before you convert.

Yes. US citizens can generally keep receiving Social Security abroad indefinitely, as long as they live in a country where SSA can send payments, according to the Social Security Administration. That covers nearly all of Europe.

Where payments are blocked

Treasury prohibits payments to Cuba and North Korea. SSA also generally cannot pay in Azerbaijan, Belarus, Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan or Uzbekistan. If you are not a US citizen, payments may stop after 6 full calendar months abroad unless an exception applies, for example if you are a citizen of a country on SSA's country lists. SSA's Payments Abroad Screening Tool shows whether you qualify.

Executive Order 14247, signed 25 March 2025, requires federal payments to go out electronically. SSA ended most paper checks from 30 September 2025 and says it will move all remaining beneficiaries to direct deposit or Direct Express during 2026, according to Money.com. Hardship waivers remain available. If you live abroad and need help, call SSA at 1-800-772-1213.

Totalization agreements

The US has 31 totalization agreements in force, most of them in Europe. The newest, with Romania, took effect on 1 September 2026, per the Social Security Administration. European partners include Austria, Belgium, the Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Luxembourg, the Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, Switzerland and the UK. They cover retirement, disability and survivors benefits, but not Medicare benefits or SSI.

Not through WEP or GPO anymore. The Social Security Fairness Act, signed 5 January 2025, repealed the Windfall Elimination Provision and the Government Pension Offset for benefits payable after December 2023, as the Congressional Research Service explains. CRS notes these rules applied to some foreign pensions from work not covered by US Social Security. SSA summarized the law in its legislative bulletin.

Does Medicare cover me in Europe?

Generally no. Medicare does not cover health services you receive outside the United States, according to the Social Security Administration. You will need local public coverage or private insurance in your new country.

The harder question is Part B. If you delay it, your premium is 10% higher for each 12-month period you could have enrolled but did not. MoneyTalksNews calls this the Medicare trap for people retiring abroad.

Here is the math. Say you turn 65, move to Spain and skip Part B, then return to the US after three full 12-month periods without it. Your premium is 30% higher (3 x 10%). That surcharge generally lasts for as long as you have Part B. Time abroad does not give you a Special Enrollment Period, so you would usually sign up during the General Enrollment Period, 1 January to 31 March. Confirm your dates on Medicare.gov's page on avoiding late enrollment penalties.

Worked example: retiring in Portugal in 2026

Portugal no longer offers new retirees a low flat rate. NHR closed to new applicants on 31 December 2023, with a transitional window to 31 March 2025. Its replacement, IFICI, took effect on 1 January 2025 and excludes pensions, according to GrowAcross. New retirees pay standard progressive rates on foreign pensions, reported as up to 48%, instead of the old 10% flat rate.

Take a 66-year-old retiree from Ohio who becomes a Portuguese tax resident in 2026 with three income streams:

Social Security: The US can tax it under treaty Article 20(1)(b). Most current adviser guides say Portugal can also tax it as your residence country with a credit for US tax under Article 25. A minority say only the US taxes it, so confirm with a Portuguese tax adviser.
Traditional IRA withdrawal of $21,700 (about €20,000): taxed in Portugal and also on the US return. The credit works through treaty re-sourcing (see the foreign tax credit section above).
Qualified Roth withdrawal of $21,700 (about €20,000): tax-free in the US, but typically taxed in Portugal.

The Roth is where the money goes. If Portugal taxed the whole withdrawal at the 28% rate one source reports, the tax would be €20,000 x 28% = €5,600. The US charges nothing on a qualified Roth withdrawal, so there is no US tax for a credit to offset, and the €5,600 is a real cost. Portugal may tax only the earnings portion, or may apply progressive pension rates instead. Get a Portuguese adviser's view.

Legacy NHR holders pay 10% (registered from April 2020) or may be exempt (registered earlier), if the Roth counts as a pension. At 10%, the same withdrawal would cost €2,000.

IRA withdrawals are paid in dollars; Portugal assesses tax on the euro value on the payment date. The euro figures above are illustrative, so your real tax moves with the exchange rate. For the residence side, read our guide to Portugal TRC tax and Social Security requirements.

Expatriate financial planning steps before you move

Do the planning before you become a tax resident in Europe, because some choices, like Roth conversions, get harder once you live there. Work through these steps in order.

List every retirement income stream: Social Security, 401(k), traditional IRA, Roth IRA, any pension and any wages.
Read the pensions and Social Security articles of the treaty with your target country, and check IRS Publication 915 for the exemption list.
Check your income with our Europe visa income checker.
Decide on Roth conversions and large withdrawals with an adviser while you are still a US resident.
Use SSA's Payments Abroad Screening Tool and set up electronic payment.
Make your Medicare Part B decision with the lasting 10% surcharge in mind.
Plan your US reporting with our guides on FBAR for Americans in Europe and FATCA reporting (FBAR vs Form 8938).
Choose expat financial planning services that know both tax systems. Our guide to expat-friendly financial advisors in Europe covers what to ask.

Common mistakes

Most costly errors come from assuming US rules carry over to Europe. These come up again and again.

Counting on the FEIE for retirement income. It covers wages only.
Assuming a Roth is tax-free everywhere. France, Portugal and Spain may tax it.
Assuming Social Security is untaxed in Spain or Portugal. Spain taxes it with a credit for US tax, and most current guidance says Portugal does the same.
Expecting an automatic credit on IRA withdrawals. The income is US-source, so the credit depends on treaty re-sourcing.
Planning around Portugal's 10% NHR rate. New retirees pay progressive rates, reported as up to 48%.
Confusing a totalization agreement with a tax treaty. One covers payroll taxes and benefit eligibility, the other income tax.
Leaving income off the US return because of a treaty. The saving clause usually keeps US citizens taxable.
Assuming the Italy exemption covers all Americans. The IRS limits it to people who are also Italian citizens.
Dropping Part B without doing the math. The surcharge generally lasts as long as you have Part B.

Frequently asked questions

Does France tax my 401(k) and IRA withdrawals?

In practice France does not tax them, but it still counts them. Article 18 of the US-France treaty gives the US the sole right to tax distributions from 401(k) and traditional IRA plans set up in the US, and France gives a credit equal to its own tax. France still counts this income when working out the rate on your other French-taxable income, so it can push that income into a higher bracket, as Kohen Avocats explains.

Is Portugal still worth it for American retirees after NHR?

It depends on your income mix. Since NHR closed and IFICI excluded pensions, new retirees pay Portugal's progressive rates, reported as up to 48%, on 401(k) and IRA withdrawals. Roth withdrawals are usually taxed too. For Social Security, most current adviser guides say Portugal can tax it as your residence country, with a credit for US tax under Article 25. A minority say only the US taxes it.

Is the 10% early withdrawal penalty waived if I live abroad?

No. Living in Europe does not waive the 10% additional tax on 401(k) or IRA withdrawals taken before age 59½. The usual exceptions still apply, exactly as they would if you lived in the US, and moving abroad adds no new one. See IRS Topic 558 for the rules. Your European country may also tax the same withdrawal as income.

Do I still file a US tax return if my income is low?

The same filing thresholds that apply in the US apply to citizens living abroad. If your gross income is below the threshold for your filing status, you may not have to file a return. Check the current figures on the IRS page for US citizens and resident aliens abroad. Foreign account reports such as the FBAR follow their own separate rules, so check those as well.

Where do I get my SSA-1099 if I live abroad?

You can request a replacement SSA-1099 online through your my Social Security account on ssa.gov. If you cannot use the online account, contact the Federal Benefits Unit that serves your country, which handles Social Security questions for people living overseas. Keep the form with your tax records, because you or your preparer will need the benefit figures for your US return.

Do state taxes follow me abroad if I keep a US address?

They can. Some states, such as California or Virginia, may treat you as still resident if you keep ties there, even after you move to Europe. That could mean state tax on your retirement income on top of US federal and European tax. Check your state tax department's residency and domicile rules before you leave, and decide which ties to keep and which to cut.

References

Filed under Expat Finance & Investing Retirement & Pensions

Muhammad Sahil

Founder and editor of EU Info Hub. Digital marketer with over seven years of freelance experience, now studying economics and business in Europe. He has been through the residence permit process himself. This article is general information, not legal or financial advice. Always confirm details with the relevant consulate or authority.