401(k) Plans for US Expats

For many Americans, a 401(k) is a cornerstone of retirement planning. But if you’ve moved abroad or are planning to, you might wonder what happens to your 401(k)once you become an expat. Can you keep it? Can you contribute to it from overseas?

In this article, we’ll break down everything US expats need to know about 401(k) plans—from contribution limits and withdrawal rules to international tax implications.

Can You Keep Your 401(k) If You Move Abroad?

Yes, absolutely. Your US employment history determines your 401(k), not where you currently live. If the plan remains with a US-based provider, you can keep your existing 401(k) when you move overseas. You don’t have to close it; it will continue growing based on your investments.

However, while you can keep your 401(k), making new contributions can be tricky if you no longer work for a US employer.

Can Expats Contribute to a 401(k)?

In most cases, if a US company no longer employs you, you cannot contribute to a 401(k). Contributions must come from earned income connected to US employment. This means:

• You can typically keep contributing if employed by a US company and paid on a US payroll, even while living abroad.
• If you work for a foreign employer, even if you’re a US citizen, you cannot contribute to your old 401(k.

You might consider rolling your 401(k) into an IRA (Individual Retirement Account), which offers more flexibility, especially if you’re no longer tied to a U.S. employer.

What Happens to Your 401(k) When You Withdraw Overseas?

US tax law applies to your 401(k) withdrawals, no matter where you live. Here’s what to know:

• Before age 59½: Early withdrawals are subject to a 10% penalty plus regular income tax.
• After age 59½: Withdrawals are taxed as ordinary income, but there’s no penalty.
• Required Minimum Distributions (RMDs): Start at age 73 unless you’re still working.

Importantly, the US will tax these distributions regardless of where you live. Whether the country you’re living in also taxes the distributions depends on local tax laws and any tax treaty in place with the US.

How Do You Pay Taxes on 401(k) Distributions While Living Abroad?

Where you live determines how your 401(k) will be taxed. Some countries tax US retirement income, while others exempt it, especially if a tax treaty is in place. Key points:

• No tax treaty: You may be double taxed—once by the US and again by your country of residence.
• With a tax treaty: Many treaties reduce or eliminate this risk, allowing US tax to be credited against local taxes or even exempting US pensions entirely.

Examples:

• UK, Germany, and Canada all have treaties that allow credit for US taxes paid and vice versa.
• France has a more complex arrangement that may dictate where retirement income is taxed.

You may need to file Foreign Tax Credits (Form 1116) or claim treaty benefits (Form 8833) with your US tax return to avoid double taxation.

Foreign Earned Income Exclusion (FEIE) Doesn’t Apply

Many US expats use the Foreign Earned Income Exclusion (FEIE) to exclude up to $126,500 of income (as of 2025) from US taxes. However, this does not apply to retirement income, including 401(k) distributions.

Why? The IRS treats 401(k) distributions as passive income, not earned income, so they’re fully taxable and don’t qualify for the Foreign Earned Income Exclusion or the Foreign Housing Exclusion.

Rolling Over Your 401(k) as an Expat

If you can no longer access your employer’s plan, you can roll your 401(k) into a Traditional IRA or Roth IRA. This can give you more control over your investments and make managing your retirement savings from abroad easier.

Traditional IRA: Keeps the tax-deferred status. Distributions are taxed as ordinary income.

Roth IRA: If you convert, you’ll pay tax upfront on the amount converted, but you can enjoy tax-free withdrawals later (if certain conditions are met).

Rolling over can be beneficial, but be cautious with Roth conversions—especially as an expat—since local tax laws may not recognize the tax-free growth.

State Tax Considerations

Even if you’ve moved abroad, your last state of residence in the US may still try to tax your 401(k) withdrawals—especially if you’re from a state that taxes retirement income.

Some states, like California and New York, have aggressive residency rules. You could be on the hook for state income tax if you haven’t formally severed ties.

To avoid this, consider formally changing your state of domicile to one that doesn’t tax income (like Florida, Texas, or Nevada) before moving abroad.

Final Thoughts

Your 401k doesn’t disappear when you move abroad—but how you manage it matters. While you may not be able to contribute from overseas, you can still grow your retirement savings and take distributions strategically. The key is understanding your tax obligations in the US and your country of residence and making informed decisions to protect your future.

If you’re a US expat with questions about your 401k, IRA, or international tax filing? Let our expert team is here to help. We specialize in expat tax compliance and retirement planning. So that you have more time to enjoy your life abroad!

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