Investing in a Roth IRA from UAE: How To Save for Retirement as a US Expat

While working overseas, however, you may encounter limitations that affect your ability to contribute to traditional US retirement plans such as 401(k) and 403(b) plans.

By contrast, Individual Retirement Account (IRA), including Roth IRAs, are not location-restricted.

You may be able to contribute to a Roth IRA while living in the UAE, provided you meet specific Internal Revenue Service (IRS) criteria—most notably, having US-taxable earned income and staying within prescribed income thresholds.

This guide outlines the conditions for maintaining your Roth IRA in the UAE and presents the full range of retirement planning alternatives available to US expats, including voluntary pension schemes and investment-based solutions in the UAE.

Can You Maintain Your Roth IRA While Living in the UAE?

Yes, US expats residing in the UAE can maintain and contribute to their Roth IRA while abroad, but there are two crucial factors to consider:

• You must have earned income that is taxable in the US.
• Your modified adjusted gross income (MAGI) must fall below the IRS contribution threshold.

Having Earned Income Taxable in the US

Even while living abroad, the IRS mandates that any income used for Roth IRA contributions must be taxable and reportable on your US tax return.

US expats in the UAE may claim the Foreign Earned Income Exclusion (FEIE) using IRS Form 2555, allowing them to exclude up to $126,500 (2025 limit) of foreign-earned income from US taxation.

However, doing so disqualifies that income from being used for Roth IRA contributions, as the IRS does not consider excluded income to be taxable compensation.

To contribute while abroad, you must either:

• Forego the FEIE and report your foreign-earned income as fully taxable in the US, or
• Use another source of US-taxable earned income, such as remote work for a US-based employer.

Having Modified Adjusted Gross Income Below the Contribution Limit

The 2025 contribution limit for a Roth IRA is $7,000, or $8,000 if you are 50 years or older. These limits depend on your MAGI, which includes foreign-earned income (even if excluded under FEIE), Social Security income, housing exclusions, and interest earnings.

This table outlines how much you can contribute based on your MAGI and filing status:

High-Income Planning Strategy: Backdoor Roth IRA

For high-income expats whose MAGI exceeds the contribution thresholds, a backdoor Roth IRA may be an option.

This strategy involves making non-deductible contributions to a Traditional IRA and subsequently converting those funds into a Roth IRA.

This must be handled carefully to avoid triggering additional tax liabilities under the pro-rata rule and should only be pursued with guidance from a qualified tax adviser.

Is There a Roth IRA Equivalent in the UAE?

The UAE does not offer a tax-advantaged retirement vehicle equivalent to the Roth IRA under its legal or regulatory framework. If you currently hold a traditional or Roth IRA, there is no compatible plan in the UAE into which these funds can be transferred.

Residents who want to save towards retirement within the UAE will have to consider other types of retirement vehicles. While expats are not eligible to contribute to the UAE’s mandatory federal pension scheme, there are five main options they can utilise to save for retirement as a foreign national:

1. End-of-service benefits
2. Voluntary pension scheme
3. Golden Pension Plan
4. DIFC employee workplace savings plan (DEWS)
5. Private pension plans

End-of-Service Benefits

Employees who have worked with a company for at least one year will receive an end-of-service gratuity when they resign or are laid off. End-of-service benefits are typically paid within 14 days from the end of the work contract.

The value of your end-of-service gratuity will depend on:

• Your basic salary
• Whether you worked in the private or public sector
• The length of time you worked for your employer:
  • If you were employed by the company for one to five years, your gratuity will amount to 21 days of your basic salary for each year.
  • If you worked with the company for more than five years, your gratuity will be equivalent to 30 days’ basic salary for each year after the first five years.

The total gratuity you can receive from an employer cannot surpass the combined value of the remuneration equivalent to two years’ salary.

Voluntary Pension Schemes

With approval from the Ministry of Human Resources and Emiratisation (MoHRE), UAE companies can establish a voluntary pension scheme for their employees. These pension plans are managed by fund managers licensed by the MoHRE and regulated by the Securities and Commodities Authority (SCA).

Employers are required to pay a basic subscription fee on behalf of each enrolled employee, and employees can contribute a portion of their basic salary to the plan. However, personal contributions cannot exceed 25% of their annual salary.

Depending on the specifics of your voluntary pension scheme, you may be allowed to withdraw all your contributions and investment gains or a part of them.

If you change employers, you have the option to transfer, withdraw, or leave your pension benefits within the original scheme, although further voluntary contributions will no longer be allowed.

Golden Pension Plan

Administered by National Bonds and regulated by the Securities and Commodities Authority (SCA), the Golden Pension Plan is a voluntary, capital-protected scheme designed for private sector employees, including expats. Contributions may be invested in a mix of bank deposits, real estate, and Sharia-compliant assets.

This plan was designed to simplify the management of gratuity payments, making the process more transparent and reliable.

Your employer can enrol you in the Golden Pension Scheme by transferring your accumulated end-of-service gratuity as a lump sum or through monthly instalments. In addition, you can instruct your employer to withhold a portion of your earnings starting from AED 100 ($27.23) and contribute it to your pension account.

You can take out your voluntary contributions at any time, but employer funds can only be withdrawn according to the company’s policy.

DIFC Employee Workplace Savings Plan (DEWS)

DEWS is a workplace savings plan for expats employed by DIFC-licensed firms. Participation in the scheme is mandatory for employers, while employee contributions are optional.

The scheme was introduced to modernise and replace the traditional end-of-service gratuity system with a transparent, fully funded savings model designed to support long-term financial planning.

Under DEWS, your employer is mandated to contribute a percentage of your salary monthly as follows:

Voluntary contributions can be made through salary deductions and invested in your preferred asset, depending on the options offered by the DEWS provider.

DEWS members pay a fee of 1.26%—1.33% yearly based on the investment options they choose. However, this fee is included in the cost of the investment, so there is no separate charge for it.

Private Pension Plans

To secure financial comfort during retirement, expats may also explore private investment vehicles offered by banks and other financial institutions to enhance their retirement portfolio growth.

These plans are often provided via international insurers or banks and may include unit-linked investment structures.

Private pension plans can be customised to suit your specific needs, goals, and risk tolerance level. You can choose how much to contribute based on your current financial situation, select what assets to invest in, and decide how to allocate your funds across various investments.

There are several private pension schemes available in the UAE, such as the CBD Orient Pension Plan. When you are ready to retire, you can withdraw your money in a lump sum or in instalments, depending on the agreement between you and the fund manager.

US expats should ensure that any offshore pension arrangements avoid investing in Passive Foreign Investment Companies (PFICs), which are subject to highly punitive US tax treatment.

Alternative Retirement Savings Options for Expats in the UAE

Beyond Roth IRAs and pension plans, there are other opportunities for accumulating wealth that you can explore from the UAE. They include:

1. Investment accounts
2. Real estate investments
3. Dedicated savings accounts
4. Annuity

Investment Accounts

An investment account allows you to increase the profitability of your retirement fund, build wealth over time, and maintain liquidity.

By diversifying your investments across a range of securities and assets with different risk profiles, you can strengthen your portfolio’s resilience against potential losses.

Assets that you can invest in for retirement include:

• Bonds: For expats seeking a relatively low-risk asset in the short to medium term, bonds offer a safe choice, as they provide a predictable interest return over a specified period.
• Stocks: While stocks can be volatile as they are influenced by factors such as company performance, inflation, industry trends, and political stability, they offer significant profit potential, particularly if held for a long period.
• Mutual funds: Mutual funds provide a convenient investment option, as they are professionally managed by financial experts. They pool capital from multiple investors to build a diversified portfolio of bonds, stocks, and other assets, tailored to align with your financial goals and risk tolerance levels.

US expats should consult a tax adviser before investing in non-US mutual funds, which may be classified as Passive Foreign Investment Companies (PFICs) and subject to highly punitive US tax treatment under IRS rules.

Real Estate Investments

Investing in property allows you to diversify your portfolio and protect your wealth from inflation.

Depending on the state of the market, your property can generate passive income through rent, which you can then deposit into your retirement savings account or pension plan.

Alternatively, you can make renovations to increase your property’s value and sell it at a higher price in the future.

Additionally, property sales proceeds may face repatriation limits or foreign exchange (FX) restrictions depending on local banking regulations and how the transaction is structured.

Note that, unlike stocks and bonds, real estate investments have low liquidity. They cannot be sold or converted into cash within a short timeframe, which could complicate your financial situation if you ever require immediate access to funds.

Dedicated Savings Accounts

You can open a dedicated savings account and make regular contributions to supplement your retirement benefits. You can choose from various types of savings accounts based on the desired term, the rate of interest you want, and the contribution method.

Savings accounts are one of the safest retirement planning vehicles expats can use because the principal remains unaffected by market fluctuations, but interest rates may vary according to market performance or the account type.

Annuity

An annuity allows you to pay an insurance company either a lump sum or a series of contributions in exchange for a guaranteed regular income, which can last for a certain period or the rest of your life.

Additionally, an annuity may provide a safeguard against inflation and market volatility, making it a suitable choice for expats seeking a more stable and predictable investment strategy.

However, certain annuity products may not qualify for IRS-recognised tax deferral, and their tax treatment can vary significantly depending on the jurisdiction of the issuing entity and the structure of the annuity contract.