Keep Your US Accounts Abroad: 401(k), IRA, and Brokerage Access for Expats

Introduction: the #1 fear for Americans moving abroad

Every year, approximately 4.4 million US citizens live outside the United States, according to Federal Voting Assistance Program estimates. Millions more contemplate an international move — for work, retirement, adventure, or family. And for nearly all of them, the same question comes first: “Will I lose access to my retirement accounts?”

The short answer is no. Your 401(k), IRA, and most brokerage accounts do not evaporate when you change your mailing address to Tokyo, Lisbon, or Mexico City. The money is yours. The accounts remain open. The IRS still knows who you are.

But the longer answer is where the complexity lives — and where expensive mistakes happen. Contribution eligibility changes. Some brokerages restrict non-resident accounts. Foreign mutual funds trigger punitive tax treatment that can wipe out years of investment gains. And reporting requirements that did not exist when you lived in Ohio can now carry $10,000+ penalties for non-compliance.

This guide walks through every major US account type — 401(k), Traditional IRA, Roth IRA, taxable brokerage, and bank accounts — and explains precisely what changes when you move abroad, what stays the same, and where the traps are. Every rule cited here references specific IRS publications, IRC sections, and FinCEN regulations.

401(k) access abroad: what happens to your employer plan

Your 401(k) is the simplest account to keep when moving abroad: the balance stays invested, period. There is no residency requirement for maintaining a 401(k). Whether you move to Germany for a job transfer or retire to Costa Rica, your existing 401(k) balance continues to grow tax-deferred inside the plan.

What stays the same

• Your balance remains invested. The money does not get returned to you, transferred to the government, or frozen. It sits in whatever funds you selected and continues to compound.
• Distribution rules are unchanged. You can take withdrawals at 59½ without the 10% early withdrawal penalty, just as you would domestically. Required minimum distributions (RMDs) begin at age 73, or 75 if you were born in 1960 or later, under SECURE 2.0 (IRC § 401(a)(9)).
• Rollovers still work. You can roll your 401(k) into a Traditional IRA from abroad. This is often advisable because IRAs offer broader investment choices than most employer plans. The rollover is not a taxable event if done as a direct trustee-to-trustee transfer.
• Hardship withdrawals are still available under the plan's rules, though the 10% early withdrawal penalty and income tax still apply if you are under 59½.

What changes

• New contributions stop if you no longer have a US employer. 401(k) contributions require an employer sponsoring the plan. If you leave the US employer, you cannot contribute to that 401(k) regardless of where you live.
• Plan administrator restrictions may apply. Some plan administrators have policies about foreign addresses. They may require a US mailing address for correspondence, restrict online access from foreign IP addresses, or add additional verification steps for international distribution requests. These are administrative policies, not legal restrictions — but they can create friction.
• Tax withholding on distributions depends on whether you are a US citizen or a nonresident alien. US citizens abroad are still taxed on worldwide income and report 401(k) distributions on Form 1040. Nonresident aliens face a flat 30% withholding on distributions (reduced by applicable tax treaty), reported on Form 1042-S.

The rollover decision

If you are leaving the US permanently (or for an extended period), rolling your 401(k) into a Traditional IRA before you leave is worth strong consideration. An IRA at a broker-friendly institution like Interactive Brokers or Charles Schwab gives you full control over investment selection, easier online access from abroad, and no dependence on a former employer's plan administrator. You can initiate a direct rollover by contacting your plan administrator and the receiving IRA custodian — the funds transfer directly without tax withholding.

Timing matters. It is easier to set up new IRA accounts while you still have a US address. Some custodians are more accommodating with the initial account opening when you have a domestic address on file. Open the IRA, initiate the rollover, confirm the transfer, and then update your address after the account is established.

IRA access abroad: the FEIE contribution trap

Your existing IRA balances — both Traditional and Roth — are not affected by moving abroad. The accounts remain open, the investments keep growing, and distribution rules are unchanged. But the ability to make new contributions is where expats run into a trap that catches thousands of Americans every year.

The contribution eligibility rule

To contribute to any IRA (Traditional or Roth), you must have taxable compensation (IRC § 219(b)(1)(B); IRS Publication 54). For most people, this means earned income from wages or self-employment. Here is where living abroad creates a problem: if you use the Foreign Earned Income Exclusion (FEIE, Form 2555) to exclude all of your earned income from US taxation, your taxable compensation drops to zero — and with zero taxable compensation, you cannot contribute to an IRA.

This is not a bug; it is how the tax code works. The FEIE for 2026 allows you to exclude up to $132,900 of foreign earned income (Rev. Proc. 2025-32). If you earn $100,000 abroad and exclude all of it, your taxable compensation for IRA purposes is $0. No contribution allowed.

The workaround: Foreign Tax Credit instead of FEIE

The Foreign Tax Credit (FTC, Form 1116) achieves a similar goal — avoiding double taxation — but through a different mechanism. Instead of excluding the income, you report all your foreign income as taxable and then claim a credit for the foreign taxes you paid. Because the income remains “taxable compensation” on your US return, you retain IRA contribution eligibility.

The FTC is more complex to calculate than the FEIE, and the optimal choice depends on your specific situation: the tax rate of your country of residence, your income level, and your overall tax position. For Americans living in high-tax countries (most of Western Europe, Japan, Australia), the FTC often produces a better result anyway because the foreign tax credits fully offset or exceed the US tax liability. For Americans in low-tax or no-tax countries (UAE, Panama, certain Caribbean nations), the FEIE is typically more beneficial — but at the cost of IRA contribution eligibility.

Earnings above the exclusion cap: Only the foreign earned income you exclude stops counting as compensation. If you earn $140,400 abroad in 2026 and exclude the maximum $132,900, the remaining $7,500 stays taxable compensation — exactly enough to max out a 2026 IRA contribution ($7,500, or $8,600 if age 50+; IRS Notice 2025-67). Whether claiming a smaller exclusion than the maximum is a sound way to create IRA room at lower incomes is a question for a cross-border tax advisor before you file.

Roth IRA income limits still apply

Even with taxable compensation, Roth IRA contributions phase out at modified adjusted gross income (MAGI) of $153,000–$168,000 for single filers and $242,000–$252,000 for married filing jointly in 2026 (IRS Notice 2025-67). If your total worldwide income (before FEIE exclusion) pushes your MAGI above these thresholds, direct Roth contributions are not permitted. The backdoor Roth strategy (contribute to a Traditional IRA, then convert) remains available. Source: IRS Publication 590-A, Table 2-1.

Brokerage accounts: the real problem area

This is where expats encounter the most practical friction. Unlike retirement accounts, which are governed by federal tax law, brokerage account access is largely governed by each firm's compliance policies — and those policies vary dramatically.

Vanguard

Vanguard will not open new accounts for clients with a non-US address. Existing accounts may be restricted if you update your address to a foreign location: certain transactions may be blocked, and new mutual fund purchases may be prohibited. Vanguard's own rule is that you need a U.S. mailing address to open an account.

Many expats with Vanguard accounts choose to keep a US mailing address on file (family member's address or a US mail forwarding service) to avoid triggering restrictions. This is common, but tell your broker where you actually live: giving a forwarding address as your residence can breach a broker's account terms.

Fidelity

Fidelity publishes its own rules for investors living outside the US. We could not read them when we checked, so check that page, or ask Fidelity, before you move: what you can open and buy with a foreign address is the question to ask.

Charles Schwab

Schwab is historically the most expat-friendly of the major US brokerages. They offer a Schwab International account specifically designed for US citizens and residents living abroad. This account provides access to US-listed securities, ETFs, and mutual funds from most countries. Schwab also offers the popular Schwab Bank Investor Checking account, which refunds ATM fees on cash withdrawals worldwide — a significant benefit for expats.

However, Schwab has gradually tightened some policies. Certain countries are restricted, and the range of available products may be narrower than a domestic account. Always verify current policies for your specific country of residence before relying on Schwab as your primary broker abroad.

Interactive Brokers: the expat standard

Interactive Brokers (IBKR) is widely regarded as the gold standard for US citizens living abroad. They explicitly support international clients, allow foreign addresses on accounts, offer multi-currency capabilities, and provide access to 170+ markets in about 40 countries and territories. For US citizens, they maintain a US-regulated account that provides access to all US-domiciled ETFs and mutual funds.

The trade-off: Interactive Brokers' platform is more complex than Vanguard or Fidelity. The learning curve is steeper, the interface is more institutional, and the customer service experience is less consumer-friendly. But for the specific problem of maintaining full US investment access from anywhere in the world, IBKR is the clear leader.

What to do before you move

If you are planning an international move, take these steps while you still have a US address:

1. Open an Interactive Brokers account (even if you do not fund it immediately)
2. Open a Schwab International account if available for your destination country
3. Consolidate any scattered brokerage accounts into one or two institutions
4. Set up electronic statements and paperless delivery for all accounts
5. Ensure two-factor authentication is configured and does not depend on a US phone number

PFIC rules: the biggest tax trap for expats

If there is one section of this guide you commit to memory, make it this one. The Passive Foreign Investment Company (PFIC) rules under IRC §§ 1291–1298 are the single most punitive tax provision that US expats encounter — and most learn about them only after they have already triggered the consequences.

What is a PFIC?

A PFIC is any foreign corporation where either (a) 75% or more of gross income is passive income (dividends, interest, rents, royalties, capital gains), or (b) 50% or more of assets produce or are held to produce passive income. In practical terms, virtually every non-US mutual fund and many non-US ETFs are PFICs. If you open an investment account at a bank in London, Dublin, Singapore, or Hong Kong and buy their local mutual funds, those funds are PFICs.

Why PFIC taxation is punitive

The default PFIC tax regime (the “excess distribution” method) works like this:

1. When you sell a PFIC or receive an “excess distribution,” the gain is allocated ratably over the entire holding period.
2. The gain allocated to the current year is taxed as ordinary income (no long-term capital gains rate, even if you held the fund for decades).
3. The gain allocated to prior years is taxed at the highest marginal tax rate in effect for each of those years (currently 37% for ordinary income).
4. An interest charge is added on the tax for each prior year, as if the tax was due in that year and you failed to pay it. This interest compounds.

The combined effect of the highest marginal rate plus compounding interest can result in an effective tax rate exceeding 50–60% on your investment gains. Compare this to the 15–20% long-term capital gains rate on US-domiciled funds. The PFIC rules are specifically designed to be punitive — Congress intended them to discourage US persons from investing in foreign funds that are harder for the IRS to monitor.

The paperwork burden

Each PFIC holding generally requires a separate Form 8621 filed with your annual tax return. If you own five foreign mutual funds, that is five Forms 8621. Each form requires detailed calculations of excess distributions, gain allocations, and interest charges. (No form is needed for a year in which all your PFIC stock is worth $25,000 or less and you had no distribution or sale.) Preparing these forms usually needs a specialist and can be expensive.

The solution: US-domiciled ETFs only

The simplest and most effective strategy: buy only US-domiciled ETFs and mutual funds, even while living abroad. A Vanguard Total Stock Market ETF (VTI) held through Interactive Brokers gives you broad US stock market exposure without any PFIC issues. A Vanguard Total International Stock ETF (VXUS) gives you non-US equity exposure — still no PFIC, because the fund itself is domiciled in the US.

Important nuance: Some countries (notably the EU under MiFID II/PRIIPs regulations) restrict the purchase of US-domiciled ETFs by residents because these ETFs do not produce EU-compliant Key Information Documents (KIDs). Interactive Brokers says EU and UK retail clients generally cannot buy US-listed ETFs for this reason; ask your broker whether your US citizenship or the account entity changes that before you rely on it.

What if you already own PFICs?

If you have already purchased foreign mutual funds, consult a cross-border tax specialist immediately. There are elections available — the Qualified Electing Fund (QEF) election and the Mark-to-Market election — that can mitigate the punitive default taxation, but both have timing rules; the QEF election also needs an annual information statement from the fund (which foreign funds often do not provide to individual US investors), while mark-to-market is only available for marketable stock. The sooner you address this, the smaller the accumulated interest charge.

FBAR and FATCA: foreign account reporting requirements

Once you live abroad, you almost certainly will have foreign financial accounts — a local bank account for daily expenses, possibly a local investment account, perhaps a pension from a foreign employer. The US government wants to know about every one of them, and the penalties for non-reporting are severe.

FBAR: FinCEN Form 114

The Foreign Bank Account Report (FBAR) has existed since 1970 under the Bank Secrecy Act (31 USC § 5314). You must file an FBAR if the aggregate value of all your foreign financial accounts exceeds $10,000 at any point during the calendar year. This is not a per-account threshold — it is the combined total of every foreign account you have signature authority over or a financial interest in.

“Financial account” is defined broadly: bank accounts, securities accounts, mutual fund accounts, and certain other types of financial accounts (including some foreign pension accounts and foreign life insurance policies with cash value).

Filing mechanics: FBAR is filed electronically through FinCEN's BSA E-Filing System (not with your tax return). The deadline is April 15 with an automatic extension to October 15 — no form required for the extension.

Penalties: Non-willful failure to file carries a penalty of up to $16,536 per FBAR report (not per account — Bittner v. United States, 598 U.S. 85 (2023)): the $10,000 statutory maximum, inflation-adjusted under 31 CFR 1010.821 for penalties assessed from January 17, 2025. Willful failure is assessed per account and can reach $165,353 or 50% of the account balance, whichever is greater, plus potential criminal prosecution. These are not theoretical penalties — the IRS has been aggressively enforcing FBAR since the 2009 UBS scandal: by 2016, 55,800 people had paid more than $9.9 billion in taxes, interest and penalties through the IRS offshore voluntary disclosure program.

FATCA: Form 8938

The Foreign Account Tax Compliance Act (2010) created a parallel reporting requirement through IRS Form 8938 (Statement of Specified Foreign Financial Assets). The thresholds are higher than FBAR:

• Single filer living abroad: Total value exceeds $200,000 on the last day of the tax year, or exceeds $300,000 at any time during the year
• Married filing jointly, living abroad: Total value exceeds $400,000 on the last day of the tax year, or exceeds $600,000 at any time during the year

Form 8938 is filed with your annual tax return (Form 1040). It covers a broader range of assets than FBAR — including foreign stocks and securities held directly (not just in accounts), foreign partnership interests, and certain foreign trusts. Penalty for failure to file: $10,000, plus $10,000 for each 30-day period the failure continues more than 90 days after an IRS notice, up to $50,000 more ($60,000 in total).

FBAR vs FATCA: you may need to file both

These are separate requirements administered by different agencies (FinCEN for FBAR, IRS for FATCA). Having filed one does not exempt you from the other. Many expats must file both. The filing thresholds, definitions, and penalties are different. A cross-border tax preparer will handle both, but if you are doing your own taxes, do not assume one covers the other.

Keeping US bank account access from overseas

Beyond investment accounts, maintaining a US bank account is essential for most expats. Social Security direct deposit, tax refund deposits, US-based bill payments, and maintaining a US financial footprint are all easier with an active US bank account (Social Security can also pay into local banks in many countries through International Direct Deposit).

Online banks: the most flexible option

Traditional brick-and-mortar banks (Bank of America, Wells Fargo, Chase) may close your account if you no longer have a US address — or they may not, depending on the branch and the specific compliance officer reviewing your account. Policies vary and are often applied inconsistently.

Online banks tend to be more flexible:

• Charles Schwab Bank: The Schwab Bank Investor Checking account is a favourite among expats. It refunds ATM fees on cash withdrawals worldwide, has no foreign transaction fees, and Schwab is accustomed to serving international clients. Requires a linked Schwab brokerage account.
• Capital One 360: Requires a U.S. physical address and a U.S. mobile number to open; ask before you move whether a foreign address is accepted. Online-only, so no branch dependency.
• Credit unions: Some credit unions (particularly military-affiliated ones like Navy Federal or PenFed) and the military-focused bank USAA serve many members overseas; check each one's rules for a foreign address.

The US address strategy

Many expats maintain a US mailing address through a family member or a commercial mail forwarding service (companies in states like South Dakota, Florida, or Texas that provide a physical street address, receive your mail, and scan/forward it). This is legal and common, but there are important distinctions:

• A mailing address for receiving correspondence is generally acceptable
• Representing a forwarding address as your residential address when a financial institution asks for your current residence may violate their account agreement
• For tax purposes, your state of domicile may be based on where you claim residency — using a mail forwarding address in Florida does not automatically make you a Florida resident. See our Digital Nomad Tax Guide for state domicile rules.

Pre-move financial checklist

If you are planning to move abroad, complete these steps while you still have a US residential address. Each step becomes significantly harder after you leave.

1. Open an Interactive Brokers account. Even if you plan to keep your Vanguard or Fidelity accounts, having an IBKR account as a backup ensures you always have a fully functional US brokerage.
2. Roll over old 401(k)s to an IRA. Consolidate into one IRA at a broker-friendly institution. This is easier to manage from abroad than multiple employer plans.
3. Open a Schwab checking account. ATM fee reimbursement worldwide is invaluable. Requires a Schwab brokerage account (which you should have anyway).
4. Set up electronic delivery for everything. Paper statements will not follow you reliably. Switch every financial account to electronic statements, e-delivery tax documents, and email confirmations.
5. Document your net worth. Use the Net Worth Calculator to capture a complete snapshot: every account, every balance, every institution. This becomes your baseline for tracking your financial position from abroad.
6. Configure authentication that works internationally. SMS-based two-factor authentication may not work with a foreign phone number. Switch to an authenticator app (Authy, Google Authenticator) for every financial account.
7. Find a cross-border tax preparer. Do this before you leave, not after your first filing deadline. Cross-border tax preparation is a specialized skill. The guide to finding a fee-only advisor covers how to evaluate credentials.
8. Understand your IRA contribution strategy. Decide whether you will use FEIE or FTC before your first full year abroad. This decision affects your IRA contribution eligibility for the entire year.

Frequently asked questions

Can I contribute to my IRA while living abroad?

It depends on how you file your US taxes. If you use the Foreign Earned Income Exclusion (FEIE) to exclude all of your earned income, you may have zero taxable compensation — which means you are ineligible to contribute to either a Traditional or Roth IRA. The workaround: use the Foreign Tax Credit (FTC) instead of FEIE, or earn above the exclusion cap (only excluded income stops counting), so that you retain enough taxable compensation. See the IRA section above for the full analysis.

Will my 401(k) be frozen if I move overseas?

No. Your 401(k) balance stays invested regardless of where you live. You cannot make new contributions without a US employer, but the money remains in your account growing tax-deferred. You can still take distributions and still roll over to an IRA from abroad.

What happens to my Vanguard account?

Vanguard does not open new accounts for clients with foreign addresses and may restrict existing accounts if you update your address. Many expats maintain a US mailing address to avoid triggering restrictions. For full international brokerage support, Interactive Brokers and Charles Schwab International are more accommodating.

Do I need to report foreign bank accounts?

Yes. If the aggregate value of all your foreign financial accounts exceeds $10,000 at any point during the year, you must file FBAR (FinCEN Form 114). FATCA Form 8938 has higher thresholds ($200,000 for single filers abroad). Non-willful penalties run up to $16,536 per FBAR report (not per account, since Bittner in 2023). See the FBAR and FATCA section for details.

Can I buy foreign mutual funds as a US citizen?

Technically yes, but you almost certainly should not. Foreign mutual funds are classified as Passive Foreign Investment Companies (PFICs) and face punitive US taxation — the highest ordinary rate for earlier years plus an interest charge, which can push the effective rate far above the 15–20% long-term capital gains rate. Stick to US-domiciled ETFs. See the PFIC section for the full explanation.

Is Interactive Brokers good for US expats?

Interactive Brokers is widely considered the best brokerage for US citizens abroad. They support foreign addresses, provide access to US-domiciled ETFs and mutual funds, and offer multi-currency accounts. The platform is more complex than Vanguard or Fidelity, but for expats it solves the critical problem of maintaining full investment access from anywhere in the world.