When Americans move overseas, they often bring more than just luggage—they bring complex financial instruments like IRAs, 401(k)s, Roth accounts, and U.S.-based trusts. These instruments are treated very differently depending on the host country. In this deep dive, we examine how France and Greece handle three key types of U.S. retirement accounts—Traditional IRA, Roth IRA, and 401(k)—plus a $1 million irrevocable trust, using real-world-like scenarios.

🔎 Case Profile:

• Retirement Accounts:
  • Roth IRA: $500,000
  • Traditional IRA: $200,000
  • 401(k): $300,000
  • Growth rate: 5% annually
  • Distributions: 4% annually from IRA and 401(k)
• Social Security: $3,000/month (U.S.-sourced)
• Trust:Irrevocable, $1 million value, benefits two children

🇫🇷 Scenario 1: The Person Retires in France

📌 Social Security

Under the U.S.–France tax treaty, U.S. Social Security benefits are taxed only by the U.S. No French tax applies.

📌 Traditional IRA & 401(k)

Thanks to the U.S.-France tax treaty, these accounts are recognized as pension-like instruments. France does not tax annual growth and instead taxes only distributions, which are treated as pension income subject to French progressive tax rates and social surcharges (e.g., CSG and CRDS).

• Taxable in France when distributed
• Income brackets range from 0% to 45%plus surcharges (~9.1%)
• Treaty avoids double taxation; U.S. withholding can be credited in France

📌 Roth IRA

Roth accounts are not specifically named in the tax treaty, and the French tax authority may not automatically consider them tax-exempt. Unless the taxpayer proves:

• Contributions were made with after-tax U.S. income, and
• The account meets the definition of a retirement savings vehicle,

the French tax authority may tax Roth distributions as income. Documentation and local tax advice are critical.

📌 Irrevocable Trust

France has strict anti-tax-avoidance laws regarding trusts. Even if the trust is legally valid in the U.S., France may:

• Treat the trust as transparent, taxing income as if directly received by the beneficiary or grantor
• Impose up to 60% tax on distributions or even on the trust corpus if not disclosed properly
• Require annual filings (Form 2181-Trust) and registration

Even a non-distributing trust that benefits foreign-resident children must be declared. Noncompliance triggers heavy fines.

🇬🇷 Scenario 2: The Person Retires in Greece

📌 Social Security

No U.S.–Greece tax treaty governs Social Security. That means the person could be taxed in both countries, but:

• The U.S. typically retains taxing rights
• Greece may also tax it as foreign pension income unless an exemption or credit applies

📌 Traditional IRA & 401(k)

Greece does not recognize these accounts as tax-deferred vehicles. They are generally treated as foreign investment accounts, meaning:

• Annual growth is taxed under Greek income rules
• Distributions are also taxed as foreign income
• No deferral benefit like in the U.S.

This could lead to double taxation unless managed carefully. A local advisor may help utilize Greece’s remittance basis(for non-domiciled individuals) or suggest tax-efficient timing of withdrawals.

📌 Roth IRA

Since Roth accounts are unfamiliar in Greek tax law, the entire account (growth + principal) may be taxed upon distribution. Some accountants argue the principal portion should be exempt—but there’s no formal guidance.

📌 Irrevocable Trust

Greece has no specific trust tax law, but foreign trusts are often treated as opaque legal arrangements. Key considerations:

• If the Greek resident is grantor or beneficiary, the trust may be taxed on its income
• Distributions may be seen as foreign income
• Reporting requirements and documentation are vague but evolving

Trusts create complexity, and Greek tax advisors often take a conservative approach, assuming potential tax exposure unless clearly exempt.

✍️ Summary Table

💡 Key Takeaways

• France honors treaty protections, but Roths and trusts remain complicated.
• Greece lacks treaty protection, resulting in greater uncertainty and higher tax exposure.
• U.S. expats should seek both U.S. and local tax counsel.
• Proper disclosure and documentation are essential for compliance and minimizing surprises.
• While helpful to frame the situation, consult with a local professional to avoid surprises.