IRS Publication 590 Explained for Australians in 2025

If you’re an Australian with ties to the United States—perhaps you worked there, inherited an Individual Retirement Arrangement (IRA), or have dual citizenship—IRS Publication 590 is a document you can’t afford to ignore. This US Internal Revenue Service (IRS) publication is the authoritative guide for everything related to IRAs, from contributions and distributions to tax obligations. With the IRS updating its rules for the 2025 tax year, understanding Publication 590 is more important than ever for Australians managing US retirement assets.

What Is IRS Publication 590?

IRS Publication 590 is actually split into two documents: 590-A (Contributions to Individual Retirement Arrangements) and 590-B (Distributions from Individual Retirement Arrangements). Together, they detail the ins and outs of Traditional IRAs, Roth IRAs, and other lesser-known variants. For Australians who have lived, worked, or invested in the US, these publications explain your obligations and opportunities when it comes to reporting, contributing, or withdrawing from an IRA.

• Publication 590-A covers who can contribute, income limits, and how much you can put into your IRA each year.

• Publication 590-B focuses on distributions—when you can withdraw, required minimum distributions (RMDs), and tax implications.

Why does this matter to Australians? If you hold a US-based IRA, you’re subject to American tax law, even if you now live in Sydney, Melbourne, or anywhere else Down Under. That makes compliance with IRS rules—and the annual updates—critical.

Key 2025 Changes and What They Mean for Australians

This year’s Publication 590 comes with a handful of updates that are particularly relevant for expats and dual citizens:

• Contribution Limits Increased: For 2025, the maximum annual contribution for Traditional and Roth IRAs has risen to $7,500 USD for those under 50, and $10,000 USD for those 50 and over (thanks to the ongoing inflation adjustments). This provides more flexibility for those looking to maximise US retirement savings.

• Roth IRA Income Phase-Outs Adjusted: The income limits for contributing to a Roth IRA have also shifted. For single filers, the phase-out now begins at $146,000 USD and ends at $161,000 USD. For married filing jointly, it’s $230,000 to $245,000 USD. Australians with US income or joint US tax filings should check their eligibility.

• Required Minimum Distribution (RMD) Age: Following the SECURE Act 2.0, the RMD starting age is now 73 for those turning 73 in 2025. This means you have more time before you must begin mandatory withdrawals—and potential US tax—on your IRA.

• Foreign Address Reporting: The IRS has increased scrutiny of accounts held by US persons living abroad. Ensure your details are up to date and that you’re reporting contributions and withdrawals as required. FATCA (Foreign Account Tax Compliance Act) enforcement remains strong in 2025.

For Australians, these changes can impact everything from cross-border tax planning to your long-term retirement strategy.

Practical Implications for Australians with US IRAs

With IRS Publication 590 as your roadmap, here’s how the 2025 updates may affect your financial decisions:

• Double Taxation Risk: Australia and the US both tax worldwide income, but the Australia–US tax treaty helps avoid double taxation. Still, IRA withdrawals may be taxed differently in each country. For example, a Traditional IRA distribution is generally taxable in the US, but may also be counted in your Australian assessable income. Timing and reporting are key.

• Superannuation vs. IRA: Australians returning home often compare their US IRA with superannuation. Super has its own concessional tax treatment, while IRA distributions could be less favourable. Consider whether to keep your IRA, roll it over, or consolidate assets.

• Currency Considerations: Exchange rate fluctuations can affect both your IRA balance and the amount you report to the ATO. Keep accurate records of conversions for both US and Australian tax reporting.

• Estate Planning: Inheriting a US IRA as a non-US resident has special rules—Publication 590-B covers distribution options for beneficiaries, including the 10-year rule for inherited IRAs. Proper planning can reduce tax exposure for your heirs.

Given the complexity, it’s vital for Australians with US IRAs to keep up with annual IRS updates and coordinate cross-border tax strategies.

Action Steps for 2025

If you have a US retirement account, here’s what you should do in light of the latest Publication 590:

• Review your eligibility for 2025 IRA contributions, especially if your income or residency status has changed.

• Update your US and Australian tax records to reflect new contribution and RMD rules.

• Ensure your financial adviser or accountant is aware of your US retirement assets and understands both US and Australian tax implications.

• Stay alert for further IRS announcements, as US tax law for expats is evolving rapidly.

Conclusion

IRS Publication 590 remains a cornerstone for Australians with US retirement accounts. With significant 2025 updates, now’s the time to review your accounts, update your tax planning, and make sure you’re fully compliant—so you can focus on growing your wealth across borders.