Dear fellow practitioners, CPAs, attorneys, and other professionals, Happy New Year! Welcome to the fourteenth edition of our “Dreidel” newsletter about planning and investment issues of US citizens living overseas.

This month, Mike Reed talks about updates on the annual contribution limits for retirement and savings accounts. Below are the updated limits for 2025 for many popular options.

ACCOUNT TYPE  2025 LIMITS

Starting in 2026, individuals over the age of 50 with earned income exceeding $145,000 in 2025 will have their catch-up contributions directed into Roth after-tax 401(k) accounts. This means that although you will not receive a tax deduction upfront, any withdrawals made after age 59½ will be tax-free. This can be advantageous for U.S. residents. However, for expatriates living overseas, this may not be the best option. For example, in Israel, Roth IRA withdrawals may be subject to taxation (situation unclear), so individuals who have made Aliyah may lose the tax advantage after 10 years. Additionally, they would not have received the tax break upfront. For those who anticipate being in such a situation, contributing extra savings to a taxable account could be a more beneficial strategy.

Additional Update:

As an added bonus for this year, the U.S. has passed a law eliminating the Windfall Elimination Provision (WEP), which previously affected Social Security payments for certain workers. In the past, anyone who worked in a job not covered by Social Security and received a pension had their Social Security benefits reduced.

This is no longer the case, and the law will apply retroactively to the start of 2024. This means that individuals affected by WEP in 2024 will receive a lump sum payment in 2025 to make up for any reductions in their Social Security benefits from last year. Stay tuned for more details!

Disclaimer Nardis Advisors LLC (“Nardis”) is a Registered Investment Advisory Firm regulated by the U.S Securities and Exchange Commission in accordance and compliance with applicable securities laws and regulations. Registration does not imply a certain level of skill or training. Nardis does not render or offer to render personalized investment advice through this medium. The information provided herein is for informational purposes only and does not constitute financial, investment or legal advice. Investment advice can only be rendered after delivery of the Firm’s disclosure statement (Form ADV Part 2) and execution of an investment advisory agreement between the client and Nardis.