Hello,

I’m a US citizen living in France, working for a U.S. & French company. My employer contributes a limited amount to an SEP for me but it’s far less than I would like to (need to) contribute. I use the foreign earned income exclusion and don’t have earned income above that, and I’ve only recently learned that I am not allowed to contribute to a Roth because I don’t have earned income. So I’ll have to recharacterize my Roth contribution for last year.

Is there any other type of IRA or other tax-sheltered account that I can contribute to in this situation? A non-deductible IRA perhaps? It makes a huge difference to have tax-sheltered accumulation instead of taxable, even if the contributions are after-tax. I’ve “met” a number of other expats on the http://www.bogleheads.org forum and we are all in the same boat (or worse, since I do at least have a small SEP). Granted, we have a nice tax break but we are not consuming services in the U.S. and are paying taxes in our host country at the same time. And many of us are abroad for some years but not for a lifetime, so the retirement pensions (etc.) that we might earn in our host country will not amount to much. Is there any other retirement savings arrangement that we can use other than fully taxable investments?

Can you also confirm that I can do a Roth conversion from my old 401K, since my MAGI is less than 100,000. Is this correct, a taxable conversion is OK but a contribution is not?

Thanks for any help. Who should we write to in the U.S. (Congress, the White House, …) to urge lawmakers to reconsider this rule?

Carolyn