Retiring Abroad with U.S. Retirement Accounts
A career in the United States has left a 401(k), an IRA or a pension, and retirement will be spent in another country. The accounts stay in the United States and keep their rules; the distributions are taxed in one or both countries under the convention; the custodian needs the right form; and the account passes at death under U.S. rules to heirs who may live anywhere. The firm’s attorneys plan the distributions, the documentation and the succession.
Law stated as of October 2026
In brief.
- Required minimum distributions attach to the account, not to the residence: from 1 April after the year of the applicable age, 73 or 75 depending on the year of birth, wherever the owner lives (section 401(a)(9)).
- A U.S. citizen abroad remains fully taxable in the United States and furnishes Form W-9; withholding cannot be waived on payments delivered abroad (section 3405(e)(13)). No state may tax the retirement income of a person who no longer lives there (4 U.S.C. § 114).
- A former green card holder, or a holder who claims treaty residence at home, is taxed as a nonresident: 30 percent at source on the taxable part of each distribution, or the rate of the treaty’s pensions article on Form W-8BEN (sections 871(a) and 1441).
- Giving up the green card after eight of fifteen years is an expatriation; above the thresholds, IRAs are treated as distributed in full on the day before (section 877A(e)).
- The account passes by beneficiary designation; a designated beneficiary who is not a spouse must empty it within ten years, and a beneficiary abroad is withheld upon on each payment.
What is happening
The accounts do not move. A 401(k), a 403(b) plan or an IRA remains with its U.S. trustee or custodian and keeps the rules of the Code: required minimum distributions begin on 1 April of the year after the owner reaches the applicable age, 73 for those who reached 72 after 2022 and 75 for those who reach 74 after 2032 (section 401(a)(9)(C)), and the account passes at death to the designated beneficiary, who, unless a spouse or another eligible beneficiary, must empty it by the end of the tenth year (section 401(a)(9)(H)). A U.S. citizen remains taxable in the United States on every distribution wherever he or she lives, files Form 1040 and furnishes Form W-9; the election out of withholding is not available for a payment delivered abroad unless the recipient certifies that he or she is not a citizen or resident (section 3405(e)(13)). The state the retiree leaves may not tax the retirement income of a person who is no longer its resident (4 U.S.C. § 114). Social security benefits paid abroad are not withheld upon for a citizen, and for a nonresident are taxed on 85 percent of the benefit at 30 percent, which several conventions remove (section 871(a)(3)).
A green card holder who returns home faces a choice. Keeping the card and U.S. tax residence means Form 1040 on worldwide income from abroad and the foreign account report for the new accounts at home. Claiming residence at home under the convention ends the lawful permanent resident status for tax purposes (section 7701(b)(6)) and, like abandoning the card, is an expatriation; after eight years with the card the exit tax rules apply, under which IRAs are treated as distributed in full on the day before (sections 877(e) and 877A(e)), while qualified plans are withheld upon at 30 percent as they pay. A nonresident is taxed on the taxable part of each distribution at 30 percent, collected by the custodian, or at the rate of the pensions article of the convention claimed on Form W-8BEN with the foreign tax number; many conventions leave periodic pensions to the country of residence and some treat lump sums differently (sections 871(a) and 1441). The home country taxes the distributions under its own rules and credits or exempts under the convention. Custodians differ in whether they keep accounts with a foreign address; the custodian is chosen before the move. The convention and the situs rules also decide the estate tax on the account at death: the account of a citizen is in the worldwide estate, and practice treats the account of a nonresident as U.S.-situs property, a point the statute does not decide.
| Question | U.S. citizen abroad | Former green card holder, nonresident |
|---|---|---|
| Income tax on distributions | Form 1040, worldwide income; credit for the foreign tax under the convention | 30 percent at source on the taxable part, or the treaty pension rate; Form 1040-NR only where other U.S. income requires it |
| Form at the custodian | Form W-9 | Form W-8BEN with the treaty claim and the foreign tax number, renewed every three years |
| Withholding election | No election out on payments delivered abroad (section 3405(e)(13)) | Chapter 3 withholding replaces pension withholding |
| Required minimum distributions | From the applicable age, 73 or 75 | The same |
| State income tax | None after the move (4 U.S.C. § 114) | None |
| Social security | Not withheld upon; taxed on Form 1040, subject to the convention | 85 percent taxed at 30 percent unless the convention removes it |
| Estate tax on the account | In the worldwide estate; exclusion USD 15,000,000 (2026) | Treated in practice as U.S.-situs; convention may remove it |
| Foreign accounts opened at home | FBAR and Form 8938 each year | Not reportable |
What has to happen, in order
- Decide the status
Citizen abroad, green card kept, or treaty residence at home: each fixes the taxation of the accounts for the years to come.
- Inventory the accounts
Each plan and IRA, its custodian’s policy on foreign addresses, the Roth and after-tax parts, and the beneficiary designations.
- Apply the convention
The pensions article, the social security article and the saving clause for citizens; which country taxes which payment and who gives the credit.
- Plan the distributions
Required minimum distributions, conversions and lump sums before or after the move, each tested in both countries.
- Document the custodian
Form W-9 or Form W-8BEN with the treaty claim; the address and the account arrangements the custodian requires.
- Settle the succession
The beneficiary designations, a spouse who is not a citizen, heirs abroad and their withholding, and the estate tax position of the account.
- File each year
Form 1040 or 1040-NR, the foreign account report where it applies, and the home country return with the credit.
How the firm helps
The firm’s attorneys advise retirees before and after the move, deal with the custodians and work with the tax adviser in the new country.
- The status decision and the treaty analysis for the accounts, in writing.
- The distribution plan, including conversions and the timing of lump sums.
- The documentation at the custodians and the correspondence with them.
- The beneficiary designations and the estate plan for the accounts and the other U.S. assets.
- The U.S. returns and the foreign account reporting, prepared in the firm’s federal tax practice, in coordination with the adviser abroad.
What documents to prepare for the initial consultation
- Statements of every 401(k), 403(b), IRA and pension, with the current beneficiary designations
- Social security statements and the planned claiming date
- Passport, green card and the dates of residence in the United States
- The last three U.S. income tax returns
- The planned country of residence and date of the move, and the visa or residence permit there
- Forms W-9 or W-8BEN already on file with the custodians
- Existing wills, trusts and powers of attorney
- Statements of accounts already opened in the new country
- The citizenship and residence of the spouse and the intended heirs
Copies are sufficient. The firm sets up a secure portal for the documents and reviews them before the consultation.
The pensions articles of most conventions give the country of residence the right to tax periodic pensions and IRA distributions, with the saving clause keeping the United States’ right over its citizens; the social security articles often assign the benefit to one country alone, Germany for example to the country of residence. The convention applies to a nonresident’s distributions only on a Form W-8BEN with the treaty claim, and to a citizen through the credit on both returns.
Describe the plans in a few lines
The country, the accounts and whether the move is final are enough for the firm to say how the distributions will be taxed and what should be arranged before leaving.
