November 2, 2017 at 8:13 am #1617
I stumbled onto this forum, but I guess one day I’ll want to retire in France. What’s an IRA?November 2, 2017 at 8:14 am #1618
An IRA is an “Individual Retirement Account.” This is a savings account that is specifically designed for retirement. You can set one up and contribute to it as early on as you like.
There are several kinds of IRAs, but the most common ones are Traditional and Roth IRAs. Both kinds allow you to defer taxes on potential investment earnings, that way you can have greater savings for retirement. There are a few key differences between the two.
Traditional IRAs give you a tax deduction on your contributions, meaning the money you put into the account. They also allow you to contribute to your IRA in addition to any retirement plan you may have with your employer.
Roth IRAs give you penalty- and tax-free access to the money that you contribute to your account, meaning you can freely use that money if you need to. Under certain conditions, you can also take money out of your account during retirement without being taxed.
For more information on the differences, benefits, and disadvantages of Traditional and Roth IRAs, check out this table created by Wells Fargo:
In addition, I recommend you get in touch with your bank to find out more. They will be able to advise you as best time to open an IRA and what kind to get, based on your income, savings, and future plans.December 1, 2017 at 12:04 pm #2352
We retired to France this year and are starting IRA distributions. I know we have to pay US tax on distributions, but are they non-taxable in France? If so, do we even have to claim them when we file French tax?December 1, 2017 at 1:10 pm #2355
Adding on to Brandon’s question, are IRA distributions subject to cotisation (health coverage)?December 1, 2017 at 7:53 pm #2370
They’re nontaxable in France, but they do have to be reported as US-source income on form 2047.
If you have taxable income in France, it could push your French income up a tax bracket (so you’d pay higher tax on the French income as a result of having the US income). However, it doesn’t sound like that’s your case.
If you have ALL US-source income – pensions, interest, dividends, rental – you won’t pay any tax in France, but you do have to file a tax declaration to report it. Sometimes the tax office makes a mistake and tries to subject it to CSG/CRDS (two social taxes on passive income), but if they do, they’re wrong. And you should tell me so I can help you draft a letter to tell them so.
If you apply for PUMa, though, the pension income would be taken into account in calculating your healthcare premiums.December 1, 2017 at 8:57 pm #2378
Thanks, Allison. Sorry, what is PUMa? And are US IRA distributions and Social Security counted when determining your cost for CFAM national French health insurance?December 4, 2017 at 1:02 pm #2388
Normally yes, all income (NET – after taxes) is taken into account for PUMa premiums.
PUMa is Protection Universelle Maladie. It’s the universal health plan for those who are enrolling through CPAM and not through a job/business.December 4, 2017 at 2:44 pm #2396
Well, I thought I finally understood :-\ but PUMa threw me. You say “If you apply for PUMa, though, the pension income would be taken into account in calculating your healthcare premiums.”
Let’s say I don’t have a job, so am going through PUMa. In one year, I have an IRA distribution of $20,000, USA social security of $15,000, and capital gains in my USA investment account of $10,000.
I believe (correct me if I’m wrong) all three would be taxed by the USA only (income tax), and I would report all three to France, and pay no French income tax.
What does PUMa do with that then? (I’m trying to understand what I should budget for health coverage)December 11, 2017 at 1:33 pm #2406
You would not pay income tax to France under this scenario.
But, your PUMa premium calculation would be (all of that income = $45k) – any deductions and US tax paid x 8%.December 13, 2017 at 9:43 am #2412
Thanks Allison, that is exactly the information we were missing! (I can’t believe how hard it is to find some things! And some things are so easy…)January 19, 2018 at 2:17 am #2583
I just picked up on this thread and it answered all the questions I had about IRA distributions, but most importantly, how the PUMa premiums will be calculated. All this information is helping us to budget for our move.
Merci beaucoup !January 19, 2018 at 2:31 am #2584
YOU: (This thread, Dec 1st)
If you have ALL US-source income – pensions, interest, dividends,
– you won’t pay any tax in France, but you do have to file a tax declaration to report it.
ME: Are you sure about the “rental” income? If we rent out our home instead of selling it and make some profit, won’t we be taxed on this income? Its not a retirement funding of any kind. Am I missing something?
Ron and SuzanneJanuary 19, 2018 at 1:28 pm #2588
Ron, if the rental property is in the US, it’s subject to US tax. US-based rental income follows the same rules as other US-based passive income: you have to report it, but it won’t be taxable. What it *can* do is push you up into a higher tax bracket if you have French income that is taxable.
For the rental income, you will complete a form 2044 with the rental amounts and expenses taken off, based on the numbers used on the US tax return.
As far as the PUMa cotisations go, yes, I believe all pensions/IRA distributions will be subjected to the 8% premium.January 19, 2018 at 4:42 pm #2593
YOU: Ron, if the rental property is in the US, it’s subject to US tax. US-based rental income follows the same rules as other US-based passive income: you have to report it, but it won’t be taxable.
ME: Well, in that case we may reconsider selling our house. Our place is very rentable and could easily bring some profit. I was aware of the U.S. tax but unaware that it will not be taxed in France.
I am retired but Suzanne will not retire until December of next year. When we move in early 2020, we will both be on SS & pensions with no French income and will have no need for PUMa.
BTW, we will be in Paris for a few days in early Oct. then to the Languedoc region to reconnoiter. Thanks so much. You have been a big help.
Ron and Suzanne
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