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Suppose I move to the US partway through the year and start working. I will file a dual-status tax return. My employer offers a 401k plan and I want to contribute as much as I am permitted. I understand the maximum employee contribution for 2021 is $19,500.

Despite not being a tax resident (or any other kind of resident) for the full year, am I allowed to contribute the full $19,500 if I want to? Or does this get reduced based on how many days of the year I am a tax resident of the US?

Likewise for the $6,000 IRA limit?

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  • Just because you move to the US in the middle of the year does not necessarily mean you are dual-status. For example, if you don't pass the Substantial Presence Test or the Green Card Test, you are a nonresident alien for the whole year, although you might be able to use the First-Year Choice to become dual-status.
    – user102008
    Commented Mar 29, 2021 at 7:40
  • You're right, of course, but let's say that I have enough presence to make that choice. And as you allude to in your answer, I guess it doesn't really matter whether I'm a resident or not, as long as the employment income is US-sourced. Thank you.
    – Tyler
    Commented Mar 29, 2021 at 13:59

1 Answer 1

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I think the contribution limits are the same. Both resident aliens and nonresident aliens have the same contribution limit for IRAs -- $6,000 or their taxable compensation, whichever is less (although for nonresident aliens they can only count the compensation that is effectively connected to the US). I think the same is true for 401(k) contributions.

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