Can I keep contributing to my US 401(k) or IRA while living in New Zealand?

What decides whether I can put money into an IRA?

Compensation. The IRS sets the most you can contribute to a traditional IRA in a year as the smaller of the annual limit and "your taxable compensation" for that year.

So the limit is not only the dollar figure the IRS publishes each year. If your taxable compensation is lower, that lower amount is your limit, and if it is nothing, you cannot contribute.

Do my New Zealand wages count as compensation?

They can, and whether they do depends on a choice on your US tax return.

Publication 590-A describes compensation as, generally, "what you earn from working", and lists wages and salaries first. Then it lists what does not count, and one line matters more than the rest for anyone living abroad:

Any amounts (other than combat pay) you exclude from income, such as foreign earned income and housing costs.

The foreign earned income exclusion lets a US taxpayer living overseas leave some of their foreign wages out of their US taxable income. Wages you exclude that way are not compensation for IRA purposes. Wages you do not exclude still are.

So two people earning the same salary in Auckland can be in opposite positions. One who excludes all of it has no compensation and no IRA contribution room. One who keeps the wages in their US taxable income has compensation to contribute from. Which way to file is a wider tax decision with other consequences, and this guide does not weigh it.

Is a Roth IRA any different?

It has the same starting point and one extra condition. The IRS says you can generally contribute to a Roth IRA "if you have taxable compensation" and your modified adjusted gross income is below limits it sets each year.

The same exclusion therefore applies. Excluded foreign wages do not give you Roth contribution room either.

What about my 401(k)?

A 401(k) works differently, because it belongs to an employer.

The IRS describes a 401(k) as "a feature of a qualified profit-sharing plan that allows employees to contribute a portion of their wages to individual accounts." Contributions go in from wages, through the employer that runs the plan.

So whether you can keep paying in depends on whether you still work for the employer whose plan it is, not on where you live. If you have left that job, the money already in the account stays there, but there is no longer a payroll for new contributions to come from.

Does New Zealand care?

Yes, but mainly later. Once you are a New Zealand tax resident, New Zealand treats a US retirement scheme under its foreign superannuation rules. Inland Revenue's approach is that regular pension payments are taxed as ordinary income and lump sums go through the schedule or formula method once your first four years here are up.

There is a separate guide on how that works, because the four year window at the start of New Zealand tax residence changes the answer considerably.

What this guide does not tell you

It does not tell you whether to use the foreign earned income exclusion or another way of avoiding double tax. That affects far more than your IRA, and it is a question for a tax adviser who deals with both countries.

It also leaves alone the current dollar limits, which the IRS changes each year and which Publication 590-A sets out; whether you can deduct a traditional IRA contribution, which depends on other things; spousal IRAs; how New Zealand might treat contributions you make after moving, as distinct from withdrawals; and the double tax agreement between the two countries.

We could not find Inland Revenue guidance that names 401(k) plans or IRAs specifically. Where this guide describes the New Zealand side, it is describing the general treatment of foreign superannuation.