For most American retirees the visa is the easy part. The question that keeps people up at night comes later: when I am living in Spain and drawing on my 401(k), my IRA and my Social Security, how much of it does Spain actually take — and will the United States tax it as well? It is the right question to ask before you move, because the answer depends far more on what kind of retirement income you have than on the total figure, and because a decision as simple as which account to draw from first can change your effective tax rate for years.
This page is written for US retirees on the non-lucrative visa and looks at the Spanish tax treatment of the income you live on. It sits alongside three companion notes rather than repeating them: our guide to the US-Spain tax treaty for retirees maps the treaty article by article, US tax filing obligations for American retirees covers the return you still owe the IRS, and non-lucrative visa tax implications covers the broad shape of Spanish residency taxation. Here we go one level deeper, source by source: the 401(k), the traditional and Roth IRA, private pensions, government pensions and Social Security. None of this is tax advice; it is general orientation, and your own figures belong with a Spanish asesor fiscal and a US tax adviser working together.
On this page
First, when does Spain start taxing this income? The split that matters: general income vs savings income 401(k) and traditional IRA distributions The Roth IRA trap Private and government pensions US Social Security How double taxation is actually relieved Sequencing withdrawals: why order matters Frequently asked questions
"The clients who are happiest a year after moving are the ones who mapped every income source before they came — 401(k), pension, Social Security, and above all the Roth. The Roth surprise and a badly timed lump-sum withdrawal are the two things I most wish people had asked about before, not after. There is real planning value in the months before you become resident; use them."
— Lola Jurado · Immigration lawyer, Ilustre Colegio de Abogados de Málaga (nº 10907)
First, when does Spain start taxing this income?
None of what follows applies until you are a Spanish tax resident. Broadly, Spain treats you as resident for a tax year if you spend more than 183 days in the country during the calendar year, or if your main centre of economic interests is in Spain. Our note on the 183-day tax residency rule covers the detail, including the point that Spain does not split the tax year — you are resident for the whole calendar year or not at all. The practical consequence for a retiree is that from the year you become resident, Spain taxes your worldwide income, which is exactly the pension, distribution and investment income this page is about.
Before that point, while you are still a US resident presenting income as proof for the visa, the questions are different — those belong with our guides on using a 401(k) or IRA as proof of income and Social Security and investment income as qualifying funds. This page picks up the story afterwards, once you are living in Spain and Spain has the right to tax.
The split that matters: general income vs savings income
Spanish personal income tax — IRPF — does not put all your income in one pot. It divides it into two separate bases, each with its own set of rates, and understanding that division is the single most useful thing a retiree can grasp before drawing on their accounts. The general base (base general) holds employment income, pensions and pension-like distributions, and is taxed on a progressive scale that combines a state part and a regional part, rising well into the forties of a percent at the top. The savings base (base del ahorro) holds investment income — dividends, interest and capital gains — and is taxed on its own, lower set of bands, which for 2026 begin at 19% and climb in steps toward the high twenties for large amounts.
Why does this matter so much? Because your 401(k) and IRA distributions and your pensions generally land in the general base, taxed like a salary, while the income thrown off by a normal taxable brokerage account — dividends, interest, realised gains — lands in the lower-rate savings base. Two retirees with the same headline income can pay very different Spanish tax depending on how much of it arrives as pension-type distributions versus investment income. The regional part also means the exact rate depends on the autonomous community you settle in, so Andalucía, Valencia and Madrid are not identical.
| Income source | Spanish IRPF base (typical) | Rate character |
|---|---|---|
| 401(k) / traditional IRA distribution | General base (pension-type) | Progressive scale, like employment income |
| Company / private pension | General base | Progressive scale |
| Dividends, interest | Savings base | Lower savings bands (from 19%) |
| Capital gains on investments | Savings base | Lower savings bands (from 19%) |
| US Social Security | See dedicated section — treaty-specific | Coordinated via credits |
401(k) and traditional IRA distributions
For a Spanish tax resident, distributions from a 401(k) or a traditional IRA are generally treated as pension-type income and taxed on the general IRPF scale. In treaty terms, private pensions and similar remuneration paid in consideration of past employment are taxable in the country where the recipient resides — so as a Spanish resident, Spain has the primary right to tax these withdrawals. That is the opposite of the instinct many Americans arrive with, that money in a US retirement account is somehow a US-only matter; once you live in Spain, Spain taxes it as part of your worldwide income.
There are two nuances worth flagging without over-promising on either. First, because these distributions sit in the general base, they stack on top of your other general-base income and are exposed to the progressive scale, so a large one-off withdrawal can be taxed harder than the same amount spread over several years. Second, how a lump sum versus a regular stream of withdrawals is characterised, and whether any part of the contribution base is treated differently, is a technical matter that a Spanish adviser should confirm against your specific plan documents. The safe planning assumption is that regular 401(k) and IRA drawdowns will be taxed by Spain broadly like a pension.
The Roth IRA trap
If there is one point on this page to take to a professional adviser before you act, it is this one. In the United States a qualified Roth IRA distribution is tax-free, because you contributed after-tax dollars and the growth comes out untaxed. That tax-free status is a creature of US law. Spain is under no obligation to recognise it, and a Spanish resident cannot assume that a Roth withdrawal will be tax-free in Spain simply because it is tax-free at home.
In practice this means a Roth distribution may be taxable income for a Spanish tax resident, potentially clawing back in Spain the very advantage you paid tax up front in the US to secure. The mismatch — after-tax in the US, potentially taxable in Spain — is one of the most costly surprises for well-prepared American retirees, precisely because it catches the people who did everything "right" under US rules. The characterisation can turn on fine detail, so this is not a place for assumptions. Before drawing on a Roth as a Spanish resident, and ideally before you even become resident, have the treatment reviewed with a Spanish asesor fiscal. It may change the order in which you draw on your accounts, or the timing of your move.
Because the Roth is the account that most often catches well-prepared retirees off guard, we treat it in full in a dedicated note: is a Roth IRA taxed in Spain? covers how Spain classifies the distribution, why the foreign tax credit gives no rescue, and how to time conversions and withdrawals around the move. Traditional accounts have their own mandatory-calendar issue: our guide to required minimum distributions in Spain explains how IRA and 401(k) RMDs stack in the Spanish tax year, why the first-year delay can create two distributions in one return, and how the foreign tax credit usually differs from the Roth problem. Charitably minded retirees should also read our notes on qualified charitable distributions (QCDs) in Spain and donor-advised funds before moving to Spain, because the US charitable answer often does not cross the border neatly. Divorce support has its own mismatch: our guide to US alimony and divorce payments in Spain explains why post-2018 alimony can be non-taxable in the United States but taxable as general income after Spanish residence. A smaller but similar issue can arise with a US Health Savings Account: the HSA may remain tax-favoured under IRS rules, but Spain still needs to classify withdrawals, investment growth, reporting and wealth-tax value under Spanish rules. And if you own a US timeshare, classify it before the first resident year rather than treating it as a harmless travel product. If any of your income comes from an annuity, note that Spain treats an insurance contract on its own terms: our note on whether US annuities are taxed in Spain explains the qualified-versus-non-qualified fork and why the US exclusion ratio does not carry over.
Private and government pensions
Ordinary private and company pensions follow the same logic as the 401(k) and IRA: as similar remuneration for past employment, they are generally taxable in your country of residence, so Spain taxes them on the general scale once you live there. Government-service pensions are the important exception. Pensions paid in respect of past service to the United States or one of its political subdivisions have their own treaty article and are, as a general rule, taxable only in the United States — with the familiar carve-out that if you are a Spanish national (as opposed to only a US citizen resident in Spain), the position can flip back toward Spain.
The takeaway for anyone with a mixed history — say a state teacher's or federal pension alongside a private 401(k) — is that you cannot apply a single rule across all of it. One pension may be taxable only in the US while another is taxable primarily in Spain, and the two are reported and relieved differently. This is exactly the kind of allocation that rewards getting each income source mapped before you file your first Spanish declaración de la renta. If your career was in public service, our dedicated note on US public pensions and the Social Security Fairness Act covers the government-pension rule and the 2025 repeal of WEP and GPO in more detail. Retired railroad workers should not assume the public-pension rule applies just because the payer is a federal board: Railroad Retirement benefits need their own Tier 1 / Tier 2 split. Veterans should read military retirement and VA disability in Spain, where retired pay follows the government-pension rule but VA disability needs its own separate review.
US Social Security
Social Security deserves its own heading because it does not behave like a private pension under the treaty. Under the relevant article, US Social Security benefits paid to a resident of Spain may be taxed by the United States — the source country retains a taxing right that it does not keep for private pensions. At the same time, Spain as your country of residence generally brings the benefit into your worldwide income. The result is not a clean "one country only" outcome; instead the potential overlap is resolved through the credit mechanism rather than by the income falling out of one system entirely.
For planning, the honest summary is that Social Security is coordinated between the two countries rather than exempt in either, and the precise result depends on your full picture — the interaction with your other income, your US filing, and the credits claimed on both sides. It is a genuinely treaty-specific item, which is why it should never be lumped in with your 401(k) or your private pension when you estimate your Spanish tax.
How double taxation is actually relieved
Reading the sections above, it can look as though several types of income are taxable in both countries at once. In a literal sense they sometimes are — but that is what the double-tax machinery exists to fix, and in practice a well-advised retiree is not taxed twice over on the same money. Two mechanisms do the work together. Spain, as your country of residence, gives relief for foreign tax on income the treaty allows the other country to tax. The United States, which keeps taxing its citizens under the treaty's saving clause, relies on the foreign tax credit so that Spanish tax you have paid offsets the US tax on the same income. Because Spanish rates on pension income are often higher than the equivalent US tax, the credit frequently absorbs the US liability on that income for a US citizen.
The mechanics of the US side — the saving clause, the foreign tax credit on Form 1116, the automatic filing extension — are set out in our companion guide to US tax filing obligations for American retirees, so we will not repeat them here. The point for this page is that the relief only works if both returns are filed correctly and the timing of the two tax years is managed, which is why cross-border retirees are best served by a Spanish adviser and a US preparer who will talk to each other.
Sequencing withdrawals: why order matters
Put the pieces together and a practical lesson emerges: for an American retiree, which account you draw from, and when, can matter as much as the total you withdraw. A 401(k) or traditional IRA drawn down steadily lands in the general base and stacks progressively; a large lump sum in a single year can push into higher bands. Investment income from a taxable brokerage account is taxed in the lower savings base — though the funds inside it come with their own cross-border traps, covered in PFIC, US funds and ETFs for Spanish residents. A Roth that would have been tax-free at home may be taxable in Spain. Government pensions may sit outside the Spanish net entirely. The interaction of these — and the year you actually become resident — is where thoughtful sequencing saves real money.
This is also why the planning ideally starts before you move, not after your first Spanish tax year has closed. Decisions such as realising a gain, converting or drawing on a Roth, or taking a large distribution are often far better made while you are still a US resident than after Spain's worldwide taxing right switches on. We help clients line up the immigration timeline of the non-lucrative visa with these tax turning points, and connect the dots with your US adviser, so the move and the money are planned as one.
Frequently asked questions
Does Spain tax my 401(k) and IRA distributions?
Yes. Once you are a Spanish tax resident, Spain taxes worldwide income, and 401(k) and traditional IRA distributions are generally treated as pension-type income on the general IRPF scale. The treaty gives Spain, as country of residence, the primary right to tax private pension income, and the US foreign tax credit relieves the overlap for US citizens.
Is a Roth IRA tax-free in Spain?
Not automatically. The Roth's tax-free status is a US law feature that Spain need not mirror, so a Roth distribution may be taxable for a Spanish resident. This is one of the most important items to confirm with a Spanish asesor fiscal before you withdraw or before you become resident.
How is US Social Security taxed for a resident of Spain?
Under the treaty, US Social Security paid to a Spanish resident may be taxed by the US, and Spain as country of residence generally also includes it. The overlap is resolved through credits rather than a clean single-country result, so Social Security is treated separately from private pensions.
Are pension withdrawals taxed at the lower savings rate?
Usually not. Spanish IRPF splits income into a general base and a savings base. Pensions and 401(k)/IRA distributions normally sit in the general base on the progressive scale, while dividends, interest and capital gains fall in the lower-rate savings base. The distinction can change your effective rate substantially.
Do government pensions work the same way?
No. US government-service pensions have their own treaty article and are generally taxable only in the United States, with an exception where you are a Spanish national. Retirees with a mix of pension types should have each source reviewed rather than assume one rule applies to all.
Sources reviewed July 2026: the United States–Spain income tax treaty and published summaries of its pension, government-service and Social Security articles and its saving clause; Spanish AEAT guidance on IRPF residence and on the taxation of foreign-source income; and general material on the 2026 Spanish IRPF general and savings rate bases. General information only, not legal, tax or immigration advice, and not US tax advice; treaty treatment, IRPF rates, regional variations and the position of Roth accounts change and should be confirmed with a qualified Spanish asesor fiscal and a US tax adviser before you rely on them.