US citizens and permanent residents (green card holders) working in China face a distinctive retirement savings complexity: they remain fully subject to US income tax and IRS reporting obligations regardless of where they live, while also potentially subject to Chinese IIT on their China-source income. The intersection of Chinese and US tax obligations creates planning challenges for retirement savings.
401(k) contributions: US expatriates employed by a US company that maintains a US-based payroll and 401(k) plan can generally continue contributing to their 401(k) while in China. The treatment of 401(k) contributions for Chinese IIT purposes is a grey area — as of 2026, China has not formally exempted US 401(k) contributions from Chinese IIT calculation, which can create a mismatch. Specialist tax advice coordinating both US and Chinese obligations is strongly recommended.
IRA contributions: US expatriates in China may contribute to a Traditional or Roth IRA if they have US-source 'earned income' exceeding the amount claimed under the Foreign Earned Income Exclusion (FEIE). If the FEIE is used to exclude all US-sourced or China-sourced earned income from US taxation, this may inadvertently eliminate IRA contribution eligibility. The FEIE itself is valuable but its interaction with retirement savings should be modelled before making FEIE elections.
Rollover considerations on leaving China: upon ending a China assignment, 401(k) assets can be rolled to an IRA without current US tax, as with any domestic job change. There are no specific China-related impediments to the rollover, but if the individual is also dealing with Chinese IIT clearance and potential social insurance refunds simultaneously, coordinating the timing is advisable.
US expatriates should work with a dual-qualified US-China tax adviser (licensed in both jurisdictions) or a US-licensed CPA with China specialisation to navigate these overlapping systems.