For the American expat working and residing in Australia, no problem is more confusing—or more crucial—than retirement planning. Perhaps the most common question is how Australia’s Superannuation compares to the U.S. 401(k), and more to the point, how these retirement plans impact your expat US tax status.
This guide makes the key distinctions between 401(k) vs Superannuation understandable, spots tax pitfalls that expats need to avoid, and outlines how to stay in compliance with the IRS and the ATO (Australian Taxation Office).
What Is a 401(k)?
A 401(k) is a United States employer-sponsored retirement program that allows employees to contribute in pre-tax funds, which grow tax-deferred until they are taken out. A matching contribution is usually made by the employer. It is a defined contribution plan governed by the IRS under Section 401(k) of the Internal Revenue Code.
Key features:
- Tax-deferred contributions
- Annual limits (2025: $23,000 under 50; $30,500 50+)
- Employer match may be given
- Withdrawals counted as ordinary income
- Required Minimum Distributions (RMDs) at age 73
What Is Superannuation?
Superannuation, or “super,” is Australia’s mandatory retirement savings plan. Employers are required to contribute a percentage (presently 11.5% as of 2025) of your income to a super fund. Employees may also contribute voluntarily, in the form of pre-tax (concessional) and after-tax (non-concessional) contributions.
Key features:
- Employer contributions mandatory
- Contributions taxed at 15% (concessional)
- Investment returns also taxed at 15%
- Withdrawals normally tax-free after age 60
- Heavily regulated by the Australian government
401(k) vs Superannuation: Head-to-Head
| Feature | 401(k) | Superannuation |
| Type | Voluntary, employer-sponsored | Mandatory, employer-funded |
| Contributions | Pre-tax (tax-deferred) | Concessional taxed at 15% |
| Contribution Limits | IRS-set annual limits | ATO-set concessional limit (2025: $30,000 AUD) |
| Tax on Earnings | Tax-deferred | 15% flat tax within the fund |
| Withdrawals | Treated as income | Typically tax-free (60+) |
| Government Control | Low | High — tightly regulated |
| Portability | Limited outside US | Can be rolled over within Australia, but not out |
US Tax Treatment: The Real Catch for Expats
Here’s where things get tricky. Superannuation is not a “qualified retirement plan” for purposes of the IRS. That is, you can’t have it acted upon as if it’s a 401(k) for purposes of U.S. tax reporting.
1. Double Taxation Risk
Super contributions (including employer contributions) are taxed by the IRS as income in the year that they’re contributed, although they’re not taxable in Australia.
Profits on investments in the super fund are also tax-deductible in the United States, depending on how the IRS calculates the fund. This is double taxation—15% in Australia and U.S. income tax on top.
401(k) plans, however, are tax-deferred in the United States and do not generate tax until cash is withdrawn.
2. Foreign Grantor Trust Rules
The IRS can tax certain super funds—especially SMSFs (Self-Managed Super Funds)—as foreign grantor trusts, which pose a heavy administrative burden:
- Form 3520 – Annual Return to Report Transactions with Foreign Trusts
- Form 3520-A – Annual Information Return of Foreign Trust With a U.S. Owner
Late filing can result in huge penalties even when no tax is due.
3. FBAR and FATCA Compliance
As superannuation funds are foreign financial accounts, US expats and Green Card holders are required to report them in:
- FBAR (FinCEN Form 114) – if total foreign accounts are in excess of $10,000
- Form 8938 (FATCA) – if assets exceed IRS thresholds
Not included are US-based 401(k) plans, which are not foreign financial accounts.
Whether You Should Contribute to Super as a US Expat
It varies based on your goals and investment horizon.
Advantages:
- Super is tax-effective in Australia
- Employer contributions are required
- Funds build up with favorable local tax treatment
Disadvantages:
- Sophisticated and costly U.S. tax reporting
- No IRS tax deferral option
- Risk of double taxation
- Risk of penalties if forms are not filed
If you plan on staying in Australia in the long term, making super contributions can still be a good strategy—but it requires disciplined tax planning and yearly reporting.
Can You Roll a 401(k) Over to Super or Vice Versa?
No. 401(k) funds cannot be rolled over into Australian superannuation funds and vice versa. Each is subject to its own tax regime and cannot be rolled over between systems. Roll-over would entail:
- Early withdrawal penalties
- Immediate U.S. taxation
- Possibly even super contribution caps breaches on the Australian side
Rather, expats will have to handle the two accounts separately but with a shrewd eye, considering the different withdrawal rules, tax treatments, and estate planning implications.
Tax Planning Strategies for US Expats with Superannuation
- Seek advice from an international tax professional familiar with both Australian and U.S. law.
- Keep superb records of contributions, employer contributions, and performance of the funds.
- File all the required forms annually (FBAR, FATCA, 3520/3520-A if so required).
- Avoid SMSFs if at all possible—these attract the worst attention from the IRS.
- Investigate rollovers to Roth IRA while abroad at reduced tax rate, if appropriate.
- Consider withdrawal timing—super post-age 60 withdrawals (tax-free in AU) versus RMDs of 401(k) age 73 (taxable in U.S.)
Final Word
When comparing Superannuation and 401(k), it’s clear they’re both for the same reason but in virtually different tax worlds. Although both retirement savings plans, American expats in Australia have to deal with their own issues fitting them together.
Don’t assume what’s optimal for your Australian return is optimal for your U.S. obligations. The key is two-country tax knowledge—or better yet, qualified cross-border tax guidance.
Founder Dinis Guarda
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