Can You Invest in Portugal’s Golden Visa Through an IRA or 401K?

For Americans interested in Portugal’s Golden Visa, one question comes up again and again:

Can I use my 401(k) or IRA to fund the investment — without triggering huge U.S. tax penalties?

Technically, the answer can be yes. In practice, the answer is far more complicated.

While some advisors present this approach as a clean workaround, the reality is that using U.S. retirement funds for Portugal’s Golden Visa sits in a legally ambiguous and potentially high-risk area of U.S. tax law.

How It Works (In Theory)

Americans cannot invest directly from a standard 401(k) or IRA into a Portuguese Golden Visa fund. Instead, the structure typically involves:

• Opening or converting to a Self-Directed IRA (SDIRA) or Solo 401(k)
• Using a custodian that permits international alternative investments
• Investing €500,000 into a CMVM-regulated Portuguese venture capital or private equity fund
• Keeping the investment inside the retirement account, rather than taking a distribution

Because the funds never technically leave the retirement wrapper, this structure avoids upfront income tax and early withdrawal penalties that would normally apply if you accessed retirement money before age 59½.

On paper, it looks elegant. In practice, it raises a far bigger issue.

The Prohibited Transaction Problem (This Is the Big One)

Under U.S. tax law — specifically IRC §4975 — retirement accounts are prohibited from engaging in transactions that provide a personal benefit to the account holder.

And this is where Portugal’s Golden Visa becomes unique.

Unlike most SDIRA investments (real estate, private equity, gold, startups), a Golden Visa investment directly grants you residency rights, travel privileges, and a long-term pathway to Portuguese (and EU) citizenship.

It could easily be argued that the residency benefit is the entire purpose of the investment.

According to Jason Swan from Holborn Assets, “Yes, you can use your IRA or 401k investments to apply for Portugal’s Golden Visa. This approach is a game-changer, especially considering the usual financial burden of tapping into retirement funds prematurely. 

“Traditionally, early withdrawals could incur taxes up to 37% (plus a 10% additional tax burden if you’re under 59.5 years old). However, this innovative strategy, compliant with both IRS regulations and Portuguese laws, has already saved some applicants over 100,000 EUR by avoiding these steep penalties.” 

However, the IRS has never issued formal guidance confirming that this investing in Portugal’s Golden Visa is or isn’t allowed.

If the IRS were to determine that the visa benefit constitutes a prohibited transaction, the consequences would be severe:

• Your entire IRA or 401(k) could be treated as fully distributed
• The full account balance becomes immediately taxable
• A 10% early withdrawal penalty may apply
• Additional excise taxes could push total liability above the original investment amount

Due to FATCA reporting, Portuguese funds and banks automatically report U.S. investor accounts to the IRS. These transactions are visible, traceable, and increasingly likely to be reviewed as early adopters move through IRS audit cycles.

Some funds now require written confirmation that investors have consulted a U.S. tax advisor — a strong signal that the risk is well understood within the industry.

This route has been promoted since 2024 so thankfully, even though there’s still no official answer from the IRS, it is a more trodden path for those investing in the Golden Visa now.

Can You Ever Be Certain?

The first step — as always — is to seek excellent advice. Not just from fund managers in Portugal, but from tax attorneys in the US.

It is possible to request an IRS Private Letter Ruling (PLR). If querying a specific transaction, an IRS ruling can cost as much as $38,000. In practice, however, it typically depends on the income of the taxpayer requesting it.

According to Investopedia, In 2024, it costs $3,000 for a taxpayer with gross income of less than $250,000. If the requester earns between $250,000 and $1 million, it costs $8,500. For all other taxpayers, the cost of a private letter ruling is $38,000.

This can also add additional backlogs. The IRS normally completes ruling requests within 180 days but could take longer if multiple IRS branches are involved.

Tax Advantages — If Everything Goes Right

If the prohibited transaction issue is never enforced (or successfully defended), retirement accounts do offer advantages:

• Tax-deferred growth in a Traditional IRA
• Potential tax-free withdrawals from a Roth IRA (under U.S. rules)
• No annual personal FBAR or FATCA filings (custodian reports instead)

However, if you become a Portuguese tax resident, Portugal may tax withdrawals regardless of U.S. retirement account status — and Portugal does not recognize Roth IRAs in the same way the U.S. does.

Why External Funds Are Often the Cleaner Option

If you have access to non-retirement capital, investing outside your IRA or 401(k) is simpler.

Using external funds:

• Eliminates prohibited transaction risk entirely
• Avoids SDIRA custodian complexity
• Creates cleaner source-of-funds documentation for AIMA
• Preserves flexibility if your plans change

In many cases, withdrawing from a Roth IRA (using contributions) or using already-taxed savings can be just as tax-efficient — without the legal uncertainty.

Bottom Line

Using a 401(k) or IRA for Portugal’s Golden Visa is possible, but it is not settled law — and it carries asymmetric downside risk.

This approach may make sense for a narrow group of investors who:

• Fully understand IRC §4975
• Are advised by a U.S. tax attorney (not just a financial advisor)
• Accept legal ambiguity in exchange for tax deferral

If you have them to have, external funds or Roth contribution withdrawals are typically cleaner, safer, and easier to defend. Of course, most people don’t have €500k sitting in a savings account — it’s typically invested in retirement accounts, property, or somewhere else.

If you’re considering this route, treat it as a tax-law strategy first and an immigration strategy second — and make sure your advice comes from professionals who understand both sides of that equation.