Should You Leave Your Money in America When You Move Back Home?

Welcome back to Abroad in America with host Jimmy Miller.

If you’ve worked, saved, and invested in the United States, what happens when your time in America comes to an end? Should you move everything back to your home country, or can some of your money stay invested in the US?

In this episode, Jimmy walks through one of the biggest financial questions expats face when leaving America: what to do with US-based accounts like 401(k)s, Roth IRAs, brokerage accounts, bank accounts, company stock, and other investments.

While many expats assume they need to take everything home immediately, that is not always the best move. The US financial system can offer low costs, strong regulation, deep markets, and global investment access, but keeping money in America requires the right structure, custodian, tax planning, and long-term strategy. 

Jimmy discusses why leaving money in the US may make sense, when cashing out can create unnecessary taxes or penalties, and why planning before you leave is so important. He also covers the importance of expat-friendly custodians, W-8BEN forms, tax treaties, currency strategy, beneficiary designations, and potential US estate tax exposure for non-US citizens.

He also explains why currency planning matters when your future expenses may be in euros, pounds, francs, rupees, rand, pesos, or another currency. For more on this topic, watch our related video: How to Move Money Abroad Without Losing It to Fees (What Expats Need to Know).

This episode also includes a warning about expensive offshore investment products often marketed to expats and explains why a simpler, lower-cost, fiduciary-led strategy may be the better path.

In this episode, you’ll learn:

• What to consider before moving US-based money back home
•  Why cashing out a 401(k) early can create taxes and penalties
•  How custodians may treat accounts after you leave the US
•  Why Roth IRAs, traditional IRAs, and brokerage accounts need careful planning
•  What a W-8BEN form is and why it may matter
•  How tax treaties can affect your investment income
•  Why non-US citizens need to understand US estate tax rules
•  How to think about currency risk when your future expenses are outside the US
•  Why expats should be cautious with offshore investment products
•  How an expat-specific fiduciary advisor can help coordinate the moving pieces

Leaving America does not mean your money has to leave America too. The key is making sure whatever stays in the US stays there intentionally, with the right plan, the right accounts, and the right guidance.

As always, speak with a qualified cross-border tax professional and fiduciary advisor before making major financial decisions.

• Visit Baobab Wealth Abroad
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Transcript

SPEAKER_00 0:02

Welcome to the London America Podcast. The only financial podcast is not specific for expert living in America. Where you go behind the scenes with financial planner, author, and speaker, Jimmy Miller, to learn how to make your time in America. And now here's your host, Jimmy Miller.

SPEAKER_01 0:24

Hey everyone, welcome back to Abroad in America. I'm your host, Jimmy Miller. Over the last couple of episodes, we've been talking about retirement accounts for expats in America. In episode 16, we talked about why foreign nationals working in the U.S. should usually look very seriously at the Roth 401 instead of the traditional pre-tax 401. In episode 17, the last episode, we talked about Roth conversions and the five-year rule, basically how to clean up old traditional 401k money and move it towards the tax-free bucket. Today we're going to talk about the next logical question. What happens with your money in America when your America adventure ends? See, you've worked here, you've saved here, you've invested here, maybe you've built up a 401k, a Roth account, a brokerage account, a bank account, maybe company stock, or all of the above. And now you're going home or to another country. So the big question becomes do you take all your money with you or leave some of it in America? And the answer may surprise you, because leaving America does not always mean your money has to leave America too. Leaving the US can be bittersweet. On the one hand, you're excited, you're going home, you're going on another adventure, you might see family again, reconnect with old friends, eat proper food from your own country, and stop pretending American cheese is actually cheese. But financially, going home creates a lot of questions. What do you do with your US bank account? What do you do with your 401k? What about your Roth IRA? What about the brokerage account you opened while living here? Should you transfer everything back to your home country immediately? Should you convert US dollars to your home currency all at once? Should you keep investing in America from abroad? A lot of expats assume the default answer is, well, I'm leaving the US, so I should move all my money home with me. And that sounds logical, but it's not always the best move. Sometimes the better strategy is to leave part of your money in the US financial system, carefully, intentionally, and with the right setup. So let's start there. Why would anyone leave money in America after they move home? The first reason is simple. The US has one of the most efficient and cost-effective financial systems in the world. That means deep markets, strong regulations, high liquidity, broad investment choices, and generally very low investment costs. Now that doesn't mean you have to invest only in American companies, and that's a common misunderstanding. Through U.S. financial markets, you can build a globally diversified portfolio. You can own US companies, European companies, Asian companies, emerging markets, bonds, cash, real estate, all kinds of globally diversified investments, often at very low cost. So leaving money in America does not necessarily mean betting everything on America. We can build an all-European portfolio on the New York Stock Exchange for less cost, more liquidity, and better regulation than you can do on any stock exchange currently in Europe. It can simply mean using the American financial system as your investment platform. That's an important distinction. Think of America less like the destination and more like the airport. You can connect to almost anywhere from here. When an expat leaves the US, there are generally a few options. Option one is to cash out and take the money home with you. This may be simple, but simple does not always mean smart. If we're talking about a regular bank account or a taxable investment account, moving money home may trigger currency conversion costs, wire fees, possibly taxes, depending on what you sell and where you are a tax resident at the time. If we're talking about the traditional 401, cashing out can be much worse. As we discussed in previous episodes, if you would draw from a traditional 401 before 59 and a half years old, you may owe income tax plus a 10% early withdrawal penalty on the entire balance. That can turn your I'm taking my money home moment into an ouch. The IRS took a big bite moment. Option two is to leave the money in your existing accounts. This can work, but you need to know whether the company holding your money will continue servicing your account after you move abroad. Some U.S. financial institutions are not friendly to non-US addresses. They may restrict trading, freeze certain features, prevent new investments, or eventually ask you to close the account. This is not something you want to discover after you've already moved. Option three is to roll or transfer the money into a more expat friendly setup before you leave. This is often where planning matters most. You may roll an old 401k to an IRA, you may keep Roth money in a Roth IRA, you may move taxable investments to a custodian that works well with international clients. You may consolidate accounts so you're not managing five different logins from another continent. The right answer depends on the account type, your tax status, your home country, whether there's going to be a tax treaty in place, your long-term plans, and the custodian's rules. But the biggest point is this don't wait until the week before your flight to figure it all out. Leaving America is not just a moving event, it's a financial planning event. Now let's talk about something most expats never think about until it becomes a problem. The custodian. A custodian is the financial institution that holds your account. Think Charles Schwab, Fidelity, Pershing, Interactive Brokers, Vanguard, or another brokerage platform. For Americans living in America, the custodian often feels like a boring detail. But for expats leaving America, the custodian can become one of the most important parts of the plan, because not every custodian wants to work with clients who live outside the United States. Some firms are built mainly just for U.S. residents. Some are fine with certain countries but not others. Some allow you to keep an account but limit what you can do. Some allow international accounts but require specific paperwork. Some work better through advisors. Some are simply not worth the headache. This is why you want an expat friendly custodian. Charles Schwab is one example that often comes up because Schwab has an international brokerage platform and works with eligible non-US residents in qualifying countries. But, and this is important, country eligibility matters. Just because a custodian works with international clients doesn't mean that they work with every country, every visa status, every account type, or every investment strategy. So don't just ask, is this a good broker? Ask, will this custodian continue to serve me after I move to my specific country? That's the question that matters. Once you leave America, your tax status may change. While living and working in the US, you may have been treated as a U.S. tax resident and probably were. That meant worldwide income reporting, F bars, PFIT concerns, and the fun topics we covered in earlier episodes. But after you leave, if you're no longer a U.S. tax resident, you may become a non-resident alien for U.S. tax purposes. And that changes the rules. You may need to provide your custodian with a form W8 Ben, which certifies your foreign status and may allow you to claim tax treaty benefits if your country has a tax treaty with the United States. This matters because U.S. investment income may be subject to withholding. Dividends may be taxed differently, capital gains may be taxed differently, interest may be taxed differently, retirement account distributions also might be treated differently, and your home country may also tax the same income. In other words, leaving money in America does not mean leaving taxes behind, usually. It means you need to understand which country gets to tax what and when. That's why tax treaties matter, and that's why paperwork matters. And that's why guessing is a totally bad strategy. Now let's talk about a topic almost nobody wants to think about. Death. I know. Fun podcast here. But this is important, so hear me out. For non-US citizens who are not U.S. residents, U.S. estate tax rules can be surprisingly harsh. A non resident, non-U.S. citizen may have a U.S. estate filing issue if they die owning more than $60,000 of U.S. situated assets. That threshold shocks people. Because American citizens and U.S. residents often have a very large estate tax exemption, but nonresident, non-citizens do not automatically get the same treatment. But there are some countries that have an estate tax treaty with America, so it's important to look at what country you're going to be going to or living in and what the treaty says between the two countries. And this does not mean that every expat should panic immediately and pull all their money out of America. It means you need a plan. What assets do you own? Are they in the US? Does your home country have an estate tax treaty with the U.S.? Are your beneficiaries listed correctly? Do your accounts transfer cleanly if something happens to you? Should part of your portfolio be structured differently, maybe? This is one of those areas where a little planning can prevent a very big mess later. And it's also one of the reasons working with an expat-specific advisor matters. So let's be honest, cross-border planning is complicated. A financial advisor in your home country may not understand U.S. retirement accounts, U.S. tax rules, Roth IRAs, 401ks, WA BEN forms, U.S. custodians, or estate tax issues. But many American advisors don't understand expats either. There may be, they may be very good at helping Americans who live in Ohio and Texas and California, but not know what to do with a German, British, Indian, or South African executive who worked in America for six years and is now moving home with a Roth IRA, a traditional IRA, a brokerage account, some company stock, and three currencies involved. That's a different planning problem. An expat specific advisor can help coordinate the moving pieces. They can help you decide whether to keep money in America, move it home, or split the difference. They can help you choose a custodian that is more likely to work with your country of residence. They can help coordinate with your tax professional, and they can help manage investments while you're abroad. They can also help you avoid high fee offshore products. They can help you think through currency risks, tax treaties, estate tax exposure, retirement account withdrawals, your beneficiary designations, and whether your overall plan still makes sense after you leave. And ideally, that advisor should be a fiduciary, which means they're legally obligated to put your interest first. Because if you're leaving America and trying to make a smart decision across two or more tax systems, you don't need a product salesperson. You need a planning partner. This is a good moment to give a warning. When expats move internationally, they often become targets for expensive offshore investment products. These are sometimes sold as special expat solutions. They may sound sophisticated, they may come with glossy brochures, and they may be registered in places like the Isle of Man, Malta, Cyprus, and other offshore jurisdictions. They may promise tax efficiency, global access, or portability. But many, I would say most of these products come with super high fees, long lockups, surrender penalties, and less investor protection than you would have in the United States. Some of them are legitimate barely, but expensive. Some are worse than that. So be careful. A good expat strategy does not need to be mysterious. In many cases, the better path is boring. Just pick a good custodian, a diversified portfolio, keep costs low, have clear tax reporting, use a fiduciary advisor, plan for currency, plan your withdrawals, plan for what happens if you pass away, and plan where you actually intend to live. Boring is underrated, but boring is often what works. Let's also talk briefly about currency. If you're going home to Europe, the UK, Canada, Australia, India, South Africa, or anywhere else, you probably won't spend US dollars forever. So if you leave cash and cash equivalent money in the US in US dollars, you now have currency risk. That doesn't mean it's bad, it just means it needs to be understood. And maybe keeping some dollars makes sense because you may return to the US one day. Currency planning is not about predicting exchange rates perfectly. Nobody can do that consistently. It's about matching your money to your life. And remember, there is no currency risk in most long-term investments like stocks and equity ETFs that are probably what your IRA 401k and Roth accounts are invested in. In this case, currency is just a measuring stick. You see, Apple stock is not more valuable in one currency over another, just like a small tree isn't taller in centimeters than it is in inches. If your future expenses are in euros, pounds, francs, rupees, rand, or pesos, your portfolio should eventually reflect that reality and be invested globally. The right answer may be to keep some money in the US, move some home, and convert gradually over time. There's no hurry on your long-term investments though, as they don't carry any currency risk. Again, planning beats panic. So before you leave America, here's a simple checklist. First, identify every account you have bank accounts, 401ks, Raw 401ks, traditional 401ks, Roth IRAs, brokerage accounts, company stock, health savings accounts, equity compensation, old employer plans that you may be forgotten about. Second, decide which account should stay and which should move. Third, confirm whether your custodian will support your account after you move to your specific country. Fourth, consider rolling old employer retirement plans into IRAs if that makes sense for your situation. Fifth, make sure your beneficiary designations are updated. Sixth, understand the tax treatment in both the U.S. and your home country and whether there's a tax treaty. Seventh, complete the correct the correct tax forms after you leave, including the W eight Benn when appropriate. Eighth, create a currency strategy for your money. Ninth, consider U.S. estate tax exposure. And tenth, build a relationship with a qualified expat specific fiduciary advisor before you need one. Because once you've already moved, changed phone numbers, closed accounts, lost access to old employer systems, and packed your tax documents into a box somewhere in storage, everything becomes harder. Do it before you go. Now here's some final thoughts. Leaving America is a big transition, but your financial life does not have to be packed into a suitcase and moved all at once. For many expats, leaving money in America can make sense. The U.S. financial system is efficient, regulated, liquid, and relatively low cost. It gives access to global markets and can remain a powerful place to invest even after you move home. But it must be done correctly. You need the right accounts, the right custodians, the right tax form, the right estate planning, the right currency strategy, and ideally the right advisor. The mistake is not leaving money in America, the mistake is doing it accidentally. If your money stays here, let it stay here on purpose, with a plan, with the right structure, and with someone helping you oversee it who actually understands expat life. Because the goal is not just to build wealth in America. The goal is to build wealth that can travel with you wherever light takes you next. Now that's it for today's episode of Abroad in America. If you're preparing to leave the US, don't wait until the last minute to figure out what happens to your accounts. Start early, ask good questions, and make sure your money is set up for your next chapter. And as always, speak with a qualified cross-border tax professional and a fiduciary advisor before making the big decisions.

SPEAKER_00 15:44

And until next time, stay curious, stay intentional, and keep exploring.com. And subscribe to the blog to take up today on the next video. Don't forget to subscribe to member of the next video. PayOt Wealth and Payable Wealth Abroad are DBAs of PayoBead Wealth LLC, a Florida registered investment advisor. This podcast is designed for general education purposes only and shouldn't be taken as legal investment or tax advice. You should seek out a qualified tax professional or licensed financial advisor to determine what is best for your personal situation.