Understanding the Different Types of US Retirement Accounts

There are a range of different retirement accounts in the US, all with their own individual set of tax benefits, limitations and access rules. Even within the accounts below, your own personal suitability will be different based on your situation and things like your US employer’s contribution matching policy.

Here are some of the most common retirement accounts in the US:

Each account type has unique features. One major distinction is between pre-tax and after-tax contributions. Traditional 401(k)s and IRAs give you a tax break now, but tax your withdrawals later. Roth versions offer no immediate tax relief but allow for tax-free withdrawals in retirement.

Required minimum distributions (RMDs) are another factor. Traditional accounts generally require you to start withdrawing (and paying tax) by a certain age (currently 73), while Roth IRAs don’t have RMDs during your lifetime.

Contribution limits, eligibility rules, and the tax treatment of withdrawals vary too. This becomes especially important when you’re living outside the US and need to factor in international tax laws and currency risks.

Living abroad doesn’t mean your US retirement accounts disappear. In fact, you can often continue contributing (depending on your income and tax residency), consolidate existing accounts, or leave them invested.

However, expats need to consider a few extra layers:

• Currency risk. Your expenses might be in pounds or euros, while your retirement accounts are in US dollars. Currency swings can affect the value of your income in retirement.
• Cross-border tax rules. Depending on your country of residence, your US retirement account could be taxed differently, or even penalised. Understanding how your host country treats US-based accounts is essential.
• Double reporting. In some cases, you’ll need to report your retirement accounts on both US and foreign tax filings. Failing to do this properly can lead to fines or double taxation.

Expats are also more likely to consider pension transfers, rollovers, or consolidations to simplify their financial life. These decisions require careful planning to avoid unexpected tax liabilities or compliance issues.

Many expats don’t realise that you can maintain a 401(k) or IRA even while living abroad. And in many cases, rolling older accounts into a more modern IRA structure can improve flexibility and reduce administrative burdens.

It’s hard enough keeping track of retirement accounts when you live in one country. Add multiple currencies, foreign tax laws, and time zone differences, and it’s easy to lose track of where you stand.

That’s why tools like the Hoxton Wealth App are so valuable. It gives you full visibility into your retirement savings, lets you track your net worth across accounts and currencies, and helps you plan for retirement using real-world assumptions and projections.

For expats, features like multi-currency account tracking and goal-based planning provide a sense of control that traditional spreadsheets or fragmented account dashboards can’t.

If you have US retirement accounts, understanding your options and the differences between them is crucial to making the most of your savings. Whether you’re still contributing, preparing for retirement, or evaluating rollover options, getting expert advice is the smart move.

At Hoxton Wealth, we specialise in helping expats make informed financial decisions across borders. And with tools like the Hoxton Wealth App, you can simplify your retirement planning and feel more confident about the future, wherever in the world you choose to live.

To speak to one of our expert financial advisors, get in touch today.