If you are leaving the United States, or have already left and have a 401(k) or other employer retirement plan in America, you face a decision that has significant tax consequences.
The options available to you — rolling into an IRA, leaving funds in the plan, cashing out, or transferring — each carry different tax implications in both the US and your new country of residence.
We work with clients navigating this transition to find the most efficient structure for their situation.
We also advise Americans and internationally mobile professionals who are changing employer within the US and want to understand their 401(k) rollover options.
Yes. A direct rollover from a 401(k) to a Traditional IRA is a common and tax-efficient move when changing jobs or leaving the US. If you have a Roth 401(k), it can roll into a Roth IRA. We can advise on which type of IRA is most appropriate for your circumstances.
You cannot transfer a US 401(k) into a UK pension scheme. Your options are to leave the funds in the US plan, roll them into an IRA, or (subject to penalties and tax) cash them out. Each has different implications for US and UK tax. We advise clients in exactly this situation.
Early withdrawals before age 59½ are generally subject to a 10% penalty plus income tax. There are exceptions — including the 'rule of 55' for employer plans if you have separated from service. We can help you understand your options before making any withdrawal decision.
