If you worked in the US on an H-1B, L-1, OPT or another visa, you may have built up money in a 401(k) retirement plan. When you move home or to another country, a common question is: “Do I lose it?” You don’t. It’s your money. But what you do with it can make a big difference to how much you keep.
This guide covers the main options. It’s general information, not tax or financial advice. Because it involves US and home-country tax rules, consider talking to a cross-border tax professional before acting.
First, understand what’s in your account
- Your contributions are always 100% yours
- Employer matching contributions may be subject to a vesting schedule. If you leave before fully vesting, you may forfeit part of the match
- Traditional (pre-tax) money hasn’t been taxed yet; taxes are due on withdrawal
- Roth money was taxed already; qualified withdrawals can be tax-free
Check your latest statement or plan portal for your vested balance.
Option 1: Leave it in the plan
Many plans let former employees keep their account if the balance is above a certain amount.
Pros: no action needed, money keeps growing tax-deferred, no immediate tax.
Cons: some plans restrict account holders with foreign addresses; you’ll have fewer investment choices; managing it from abroad can be harder; you still need to keep a US address or updated contact details.
Option 2: Roll it over to an IRA
You can move the money to an Individual Retirement Account (IRA) at a brokerage, usually as a direct rollover with no tax.
Pros: more investment choices, one account to manage, still tax-deferred.
Cons: some US brokerages don’t allow accounts for people living in certain countries, so open the IRA and complete the rollover before you leave, and ask the brokerage about its policy for non-residents.
Option 3: Roll it into a new employer’s plan
If you’re moving to another US job, you can often roll it into the new employer’s 401(k). Not relevant if you’re leaving the US, but useful if you’re changing jobs first.
Option 4: Cash out
You can withdraw the full balance. For many people this is the most expensive choice.
Taxes and penalties
- Income tax: pre-tax withdrawals are taxed as income
- 10% early withdrawal penalty if you’re under 59½, unless an exception applies
- Withholding: plans generally withhold 20% on distributions to US residents. For nonresident aliens, the default federal withholding is typically 30%, unless a tax treaty reduces it and you submit the right form (usually W-8BEN)
- Home-country tax: your new country may also tax the withdrawal, possibly with credit for US taxes paid
Because you may be a nonresident in the year you withdraw, you might file a Form 1040-NR to settle the actual tax owed and get a refund of any over-withholding.
Example
Say you have $50,000 in a pre-tax 401(k) and cash out at age 32 after leaving the US.
| Item | Rough effect |
|---|---|
| 10% penalty | $5,000 |
| Federal income tax or withholding | Could be $10,000–$15,000 depending on status and treaty |
| Home-country tax | Depends on your country |
| What you might keep | Often well under $35,000 |
Leaving the money invested until retirement age could avoid the penalty and potentially lower the tax, depending on your future income and treaty rules.
Tax treaties
Some tax treaties treat US pensions or retirement distributions differently. For example, a treaty may give the right to tax to your country of residence, reduce US withholding, or recognize US retirement accounts as tax-deferred in your country. Rules vary a lot, so check IRS Publication 901 and your home-country rules.
Social Security contributions
Social Security is separate from your 401(k). If you paid into Social Security, you may qualify for benefits later if you earned enough credits (generally 40 credits, about 10 years). The US has totalization agreements with some countries that let you combine work periods. Refunds of Social Security taxes are generally not available except for taxes withheld in error.
Checklist before you leave the US
- Log into your 401(k) account and download recent statements
- Check your vested balance
- Decide: leave it, roll to an IRA, or cash out
- If rolling over, open the IRA and complete the rollover while you have a US address
- Update your mailing address and email with the plan
- Name or update your beneficiaries
- Keep login access and two-factor authentication working from abroad
- Keep a US bank account if possible for future withdrawals
- Talk to a cross-border tax advisor about the tax effects in both countries
HSA and other accounts
If you had a Health Savings Account (HSA), that money is also yours. Withdrawals for non-medical expenses may be taxed and penalized before age 65. Flexible Spending Accounts (FSAs) usually end with employment, so use them before leaving.
Common mistakes
- Cashing out without understanding taxes and penalties
- Losing access to the account after changing phone numbers or emails
- Waiting until after moving abroad to open an IRA
- Forgetting about small 401(k)s from past employers
Your 401(k) can be a valuable asset even after you leave. A little planning before your move helps you keep more of it.
Comparing the options side by side
| Leave in plan | Roll to IRA | Cash out | |
|---|---|---|---|
| Immediate US tax | None | None (direct rollover) | Yes |
| 10% penalty (under 59½) | No | No | Usually yes |
| Keeps growing tax-deferred | Yes | Yes | No |
| Investment choice | Plan’s menu | Wide | N/A |
| Easy to manage from abroad | Depends on plan | Depends on brokerage | One-time |
| Home-country tax risk | Later, on withdrawal | Later, on withdrawal | Now |
Roth 401(k) money
If part of your account is Roth, those contributions were already taxed. Qualified Roth withdrawals, generally after age 59½ and five years since your first Roth contribution, can be tax-free in the US. Your home country may treat Roth accounts differently, so check before you assume they’re tax-free there.
Required minimum distributions later
US rules require withdrawals from traditional retirement accounts to start at a certain age, currently in your 70s. Plan ahead so you can take them in a tax-efficient way, possibly using a treaty.
If you might return to the US
Many people move abroad for a few years and later come back. Keeping money in a US IRA makes it easy to keep saving if you return, and avoids penalties you can’t undo.
Practical tips for managing from abroad
- Keep a US phone number (for example through a low-cost plan or number porting service) for two-factor login codes
- Use a US mailing address you trust, or ask the provider about foreign address policies
- Store your account numbers and beneficiary forms safely
- Check your account at least once a year
- Name a US-based trusted contact if the provider allows it
Example decision
Mei worked in the US for six years on an H-1B and is moving back to Singapore. She has $80,000 in her 401(k). She plans to retire in Singapore but may return to the US. She rolls the money into an IRA at a brokerage that allows non-US residents before she leaves, keeps her US bank account open, and talks to a cross-border tax advisor about how Singapore treats withdrawals. She avoids cashing out, which would have cost her thousands in tax and penalties.
Other US accounts to sort out
Before you leave, also review any brokerage accounts, employee stock plans (RSUs or ESPP), and pensions from past employers. Some employers let you keep vested stock after leaving; others require you to sell or transfer it within a set time. Make a list of every account, its login and what you plan to do with it.
