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I was wondering if anyone out there is familiar with the rules governing IRAs for people living abroad. I am a self-employed contractor living in Germany and I am not certain if I can continue to contribute to my SEP-IRA (I would also like open a ROTH-IRA, but that's another post...) if I use the 70K exclusion allowance.

Some have indicated that you may partially "elect" out of the Section 911 exclusion ($74,000 in 1999) for purposes of qualifying wages for the IRA contribution, but I don't believe that's possible. In defining compensation for purposes of the IRA, Prop. Regs. §1.219(a)-1(b)(3) state in part "...but does not include amounts ... not includible in gross income such as amounts excluded under Section 911." Most construe the "not includible" as determinative as opposed to "not included." And "amounts excluded" refers to the statute under Section 911 whereby at the taxpayer's election foreign earned income is not includible in income to the statutory limits.
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