College Savings for U.S. Expats and Americans Living Abroad

Saving for their children’s college experience is often a financial goal that many of our clients living in the U.S. want to accomplish. But that goal becomes more convoluted when you’re an American living outside the U.S. trying to send your child to university, whether they’ll eventually be attending a school internationally or one in the U.S.

In this episode, our team of U.S. expat financial advisors – Stan Farmer, CFP®, J.D.; Syl Michelin, CFA; and Keith Poniewaz, Ph.D. – break out the lesson plan and teach you the basics about college savings and how to navigate it as a subject. Unfortunately, the investment vehicles available to Americans living in the U.S. become considerably more complex when you move away. But there are still ways to work around those complications, which we delve into, as well.

Questions about this episode or topics you’d like us to cover in future episodes of our ‘Intro to Expatriation’ series? Let us know by sending an email to podcast@walknercondon.com.

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What are the Limits for My Investing and Spending Accounts?

As we turn the page to the second quarter of 2022, it’s a good time to familiarize yourself with the changes to the more popular savings vehicles. It is imperative to understand the basics of these accounts to avoid mistakes, as the penalties can be quite onerous. This is not an exhaustive list, but it is a good place to start.

The list is broken up into the appropriate categories of employer-sponsored plans, personal retirement plans, healthcare and spending accounts, and educational accounts.

Employer-Sponsored Plans

401(k), 403(b), and most 457 plans have a new maximum employee contribution limit of $20,500, up from $19,500 in 2021. The overall maximum annual additions into defined contribution plans (which include 401(k) and 403(b) plans) increased from $58,000 to $61,000.

Individuals aged 50 and older are allowed an additional $6,500 of contributions. Note that the “age 50 catch-up” amount did not increase from 2021 to 2022.

Personal Retirement Plans

IRA and Roth IRA contribution limits are unchanged at $6,000 for people under the age of 50 and $7,000 for individuals 50 years old and older.

The traditional and Roth IRA income phase-out ranges are also increasing.

Healthcare and Spending Accounts

Health Savings Account contribution limits increased from $3,600 to $3,650 for individuals and $7,200 to $7,300 for families.

The HSA catch-up contribution for individuals 55 years old and older is an additional $1,000. This is unchanged from 2021.

The Health Care Flexible Spending Account (FSA) limit has increased to $2,850 in 2022 – up from $2,750 in 2021.

The Dependent Care FSA limit in 2022 has reverted back to $5,000 for a married couple filing a joint tax return. The American Rescue Plan temporarily increased the limit to $10,500 in 2021.