How is my 401(k) or IRA taxed if I retire in Japan?
Short answer: A 401(k) or traditional IRA can generally stay invested while you live in Japan, with withdrawals typically taxable in Japan as pension income once you are Japan tax resident, while the US also taxes the same distribution as a citizen's worldwide income; a foreign tax credit is generally the mechanism used to avoid paying full tax twice on the same withdrawal. The treaty position and ordering of returns should be confirmed with preparers on both sides before you begin drawing the account.
Written and reviewed by Anthony Walsh, Selanis. Last reviewed 2026-10-09.
Why it works this way
Pensions and similar retirement income are addressed under the US–Japan income tax treaty, and the general pattern for cross-border US retirement accounts is that the residence country taxes the distribution, with the other country's tax reduced through a credit rather than eliminated outright — the specific treaty article and any applicable protocol should be checked against your facts.
Because the US taxes its citizens on worldwide income regardless of residence, a Japan-resident American still reports the same 401(k) or IRA withdrawal on a US return; the practical question is which country's tax is primary and which gives the credit, which depends on the income type and the treaty's specific allocation rules.
Required minimum distribution rules continue to apply on the US side regardless of residence in Japan, so the shape of withdrawals — timing, size, Roth conversions in lower-income years — needs to be modelled against both the US rules and Japanese taxation of pension income.
The expensive mistake: Treating the 401(k)/IRA question as purely a US matter
Once you are Japan tax resident, the same withdrawal is also a Japanese tax event. Filing only the US side risks double taxation or a missed Japanese filing obligation.
What to do
- Confirm your Japanese tax residence status — Non-permanent resident status can affect whether and when a US distribution is taxed in Japan.
- Get the treaty position documented by both preparers — Confirm how the credit is meant to apply before the withdrawals begin.
- Model required minimum distributions against Japanese tax brackets — Sequencing withdrawals can materially change the combined tax bill.