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US Expats: Tax & Wealth Planning

Tax and wealth planning for US expats. Guidance on 401k plans, FATCA compliance, PFIC rules, and estate tax for Americans abroad.

Clients We Help • US Expats: Tax & Wealth Planning

Why financial planning is more complex for US expats

For US citizens and former residents living abroad, financial planning carries a unique set of challenges. Unlike most other countries, the US continues to tax its citizens on their worldwide income regardless of where they live. This creates an extra layer of complexity when managing retirement accounts, structuring investments, and ensuring compliance with international reporting requirements.

From 401k plan decisions to FATCA compliance, from navigating the PFIC regime to mitigating US estate tax exposure, American expatriates face a maze of rules that can have significant financial consequences if left unmanaged.

At Hoxton Wealth, we specialise in helping US-connected individuals make sense of these issues. With decades of experience advising internationally mobile professionals and families, we provide structured, compliant solutions to protect and grow wealth across borders.

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Managing 401k accounts abroad

Many US expats leave behind one or more 401k retirement accounts when moving overseas. While these accounts remain invested, they can quickly become difficult to manage from abroad.

Common challenges include:

  • Limited access: Some providers restrict online access or refuse to maintain accounts for clients with non-US addresses.
  • Currency mismatch: Balances remain denominated in USD, creating exposure to currency fluctuations when planning retirement abroad.
  • Distribution rules: Withdrawals may trigger tax obligations in both the US and the country of residence if no treaty protections exist.

401(k) Plan options

  • Roth conversion: Strategic Roth conversions can create long-term tax advantages, especially for those planning eventual repatriation.
  • Consolidation: For clients with multiple accounts across employers, bringing retirement assets together simplifies oversight and reporting.
  • IRA rollover: Moving a 401k into an IRA may provide greater investment choice and flexibility especially for expatriates.

    The decision to consolidate, rollover, convert, or retain a 401k is highly individual. It depends on age, tax residency, future relocation plans, and the wider retirement portfolio. Regulated advice is essential to avoid unnecessary penalties or double taxation.

    FATCA and reporting requirements

    The Foreign Account Tax Compliance Act (FATCA) requires US citizens and green card holders to report their non-US financial accounts once thresholds are exceeded. Additionally, foreign financial institutions must report on accounts held by US persons.

    What this means for expats:

    • Annual filing of Form 8938 with the IRS for specified foreign assets.
    • FBAR (FinCEN Form 114) filing obligations if aggregate foreign account balances exceed $10,000.
    • Non-compliance carries severe penalties, even if unintentional.

    Many expats discover too late that their overseas bank or investment accounts fall under FATCA reporting. This can lead to costly remediation. At Hoxton Wealth, we help clients understand these requirements and work alongside tax professionals to ensure ongoing compliance.

    PFIC rules and investment pitfalls

    One of the most damaging traps for US expats comes from Passive Foreign Investment Company (PFIC) rules. These apply to most non-US mutual funds, ETFs, and certain insurance-wrapped products.

    Risks of PFICs include:

    • Punitive tax treatment of gains and distributions.
    • Complex annual reporting requirements (Form 8621).
    • Unexpected double taxation for the unprepared.

    For many Americans abroad, investing in local funds can inadvertently trigger PFIC classification. We help clients explore compliant investment strategies designed to meet long-term objectives while remaining within US regulatory expectations.

    US estate tax exposure for expats

    Even for Americans who have left the US permanently, US estate and gift tax exposure remains a critical consideration.

    Key points:

    • US citizens are subject to estate tax on worldwide assets, regardless of residence.
    • The current federal estate tax exemption may change in coming years, creating planning uncertainty.
    • Jointly held property with a non-US spouse may not qualify for unlimited marital deductions without planning.
    • Trusts and cross-border estate planning tools can help mitigate exposure.

    High-net-worth individuals in particular benefit from structured estate plans that align with US law and international considerations.

    Case Study: A US executive in Dubai

    Consider a US executive working in Dubai who left behind a 401(k) plan from a previous employer in New York. Living in a tax-free jurisdiction, she assumes there are no issues. But challenges quickly emerge:

    • Her 401(k) plan provider refuses to maintain the account after learning of her overseas address.
    • She considers transferring the balance into a European mutual fund recommended locally - only to discover it would be classified as a PFIC.
    • FATCA obligations require her to report her new Dubai accounts, adding compliance complexity.

    With professional support, she successfully rolled over her 401(k) into an IRA, selected US-compliant investment options, and set up a structure to ensure FATCA and FBAR reporting was managed correctly. The result: peace of mind and a clear long-term plan aligned with her global lifestyle.

    Why structured advice matters

    For US expatriates, the risks of inaction are high:

    • Lost access to retirement accounts.
    • Punitive tax treatment of offshore investments.
    • Costly reporting failures.
    • Unplanned estate tax liabilities.

    Hoxton Wealth bridges the gap between US financial systems and international wealth planning. We combine cross-border experience with structured guidance to ensure your wealth is protected, compliant, and working for your future.

    Book a Consultation

    If you are a US expat with assets, accounts, or investments connected to the United States, now is the time to act. Our team of advisers can review your situation and provide a personalised plan.
    Book a consultation with Hoxton Wealth today and take the first step towards structured, compliant wealth planning.

    FAQs

    Important Information & Disclaimers

    This page is for informational purposes only and does not constitute tax, legal, or investment advice. The examples provided are hypothetical and do not represent personal recommendations.

    Before transferring your retirement assets, carefully review all available options, including the associated fees and features of each.

    Hoxton Wealth US and its affiliated companies do not provide tax or legal advice. Clients should consult a qualified US tax professional for advice tailored to their individual circumstances.

    For a list of our regulatory authorisations, please visit: https://hoxtonwealth.com/licencing

    This page is intended only for individuals located outside the United States. It is not directed at US residents.

    Book a Consultation

    If you are a US expat with assets, accounts, or investments connected to the United States, now is the time to act. Our team of advisers can review your situation and provide a personalised plan.