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401K Rollover for Expats

Can I transfer my UK pension to my US 401K?

401K Rollover for Expats

Are you an ex-pat living in the United States? Are you a US ex-pat now living outside of the US? If so the likelihood is that you have built up some 401K. Within this article, we will review the options available to you including 401K rollover for Expats. 

What is a 401K?

A 401 K retirement plan is a tax-qualified, defined contribution retirement account offered by the employer to the employee. The employer will make contributions on behalf of the employee, works can also contribute directly themselves. Their employer can match some or all of those contributions. Much like a UK defined contribution scheme, as monies contributed are done so before taxation, tax is then applicable on withdrawal. You can access your 401K retirement savings prior to 55 however there will be early withdrawal penalties. (more on the exceptions to this later)

Whats are the options for my 401K?

Enter drawdown (if over age 59 1/2 years old)

If over the required age, 59 1/2 you can start to withdraw income which will be taxed as income and fall in line with your annual tax allowance

Leave it as it is

Often due to busy lives or members not realising that they can move their 401K’s, many people choose to leave them invested. Employers will allow departing employees to retain their 401K indefinitely.  This can add value if the plan is very well managed with great investment choice. The risk however is that you can build up a number of old 401K policies and forget them. There is also no single strategy in the management of the monies. 

Roll over into an IRA (Individual Retirement Account)

Move/roll over all existing 401K policies to a traditional IRA. This will offer far greater investment choice, the ability to bring all your monies into one place, allow an overall strategy to be implemented in line with your investment term and requirements. This can be done via your investment adviser who can put together a bespoke portfolio to match your immediate, ongoing, and future requirements, through to retirement. You can avoid any tax liability and maintain your tax advantage status. 

Roll it over to New employer 401K scheme

Subject to your new employer offering a 401K you can roll your old 401k into your new one. This can maintain the accounts’ tax-deferred status and avoid any immediate tax liability. This can be a good option if you do not want to utilise a financial adviser / the scheme you are joining is particularly well run. 

Special changes in 2020 

Due to the Covid pandemic and the subsequent $2 trillion coronavirus emergency stimulus bill (signed into law 27.03.20), those affected can make a hardship withdrawal. This can be up to $100,000 and without the 10% early distribution penalty those than 59 1/2 normally owed. Account owners also have up to 3 years to pay any tax owed on withdrawals rather than owing it in the current year. Note, your 401K plan must have adopted the hardship provision in order to be able to do this. 

401K management and my other tax-relieved investments?

You cannot consolidate your 401K retirement plan with the UK or other countries’ pension plan, as the schemes have differing requirements. By utilising a multi-jurisdictional adviser however,  you can have your global assets managed with an overall strategy. Factoring in portfolio allocation, currency, and varying times of being able to withdraw monies, allows detailed financial planning to best utilise the different options.  

What are the next steps? 

Harrison Brook was born out of a desire for greater transparency in the multi-jurisdictional world of Financial Advice. For years, a lack of rules and regulations when crossing borders has allowed for commission-based investments, confusing fees, and poor client servicing.
Our mission is simple – to bring the highest standard of regulated advice to Expatriates throughout the world. No commission payments, no lock-in periods, no ties to products or providers. We are proud of our independence.
Our goal is to create strong, long-lasting relationships with our clients. Our unique approach to wealth management has led to us being trusted to manage over 800 clients in over 30 countries. 

401K Rollover for Expats – FAQ’s

Is my employer able to change my 401K plan rules?

Yes they can. The company is obligated to offer the best performing funds however this may not always be the case

My existing or previous 401K does not offer a fund I would like to invest in, what can I do?

Contact HR if it is your current 401K plan and raise your issue. If a past employer, you can roll your 401K into a more flexible option with better fund choice. 

How much can I contribute to my 401K a year?

Currently, (2020) employees under 50 can pay in $19,500 themselves not including employee contributions. Those over 50 can contribute an additional $6500

What are my options in light of the CARES act?

If you have become unemployed due to COvid 19, under the CARES act you can now access monies in your 401K without penalty. The first thing to do is to check with your employer if they have signed up for this.

Want to find out more?



The information contained herein is for informational purposes only which is subject to change and should not be relied upon. You should seek advice from a professional adviser before embarking on any financial planning activity.

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