A GUIDE FOR FAMILIES MOVING BACK HOME
Leaving the US? Don't leave your 401(k) behind.
You worked years for that balance. But when a visa ends or family calls you home, the 401(k) is the easiest thing to forget — and one of the most expensive to get wrong. Here are the three mistakes I see, and the cleaner path.
The 3 mistakes
None of these feel like mistakes in the moment. That's exactly how they happen.
1Cashing it out
The 10% early-withdrawal penalty plus income tax can take roughly a third of it — or more. That's not a penalty, that's a demolition.
2Leaving it with your old employer — and forgetting it
It sits there, hard to manage from abroad, at the mercy of a plan administrator you'll never talk to, in an investment menu you didn't choose.
3Assuming it can't pay you abroad
It can. A direct rollover to an IRA keeps the money tax-deferred — and from there, it can become guaranteed lifetime income. A check that follows you wherever you live.
The cleaner path
Three steps, ideally started before you leave, while you're still a US resident.
Roll it over directly
A direct, trustee-to-trustee rollover from your 401(k) into an IRA: no tax, no penalty, and the money keeps growing tax-deferred. The key word is direct — the money should never pass through your hands.
Keep it working from home
An IRA can be held and managed from abroad. Choose a custodian that works with non-resident account holders, so your account stays fully yours after the move.
Turn it into income that follows you
When you're ready, some or all of the IRA can be converted into guaranteed lifetime income through an annuity — a monthly check that keeps coming for as long as you live, wherever you live.
One myth to drop: there is no way to roll a US 401(k) into a retirement account in another country. Anyone who tells you otherwise is wrong. And the tax piece depends on your country and your exact situation — that's a job for a cross-border tax advisor, and I'll always loop one in. My lane is making sure the money isn't stranded, and that it can become income you can't outlive.
Want a second set of eyes on yours?
Deep Bansal — Licensed Life Insurance Producer, DM Legacy Partners, Michigan. I offer insurance and retirement education, and I help families leaving the US un-strand their 401(k).
One free conversation. No pressure, no obligation — bring your questions.