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Retirement Accounts: Your Alternatives When Moving to France

While working in the United States, you may have contributed to a U.S. retirement account such as an IRA (Individual Retirement Account) or a 401k (a company-sponsored retirement plan). What should be done with such an account once you take French residency? In theory, there are three choices:

Transfer the assets to a French retirement account

Ideally, moving to France would be no different than moving to another U.S. State: you would be able to transfer your retirement assets without tax consequences to a similar tax-advantaged account in France and start paying taxes to the French state when taking distributions. Unfortunately, U.S. tax laws do not allow such a transfer.

Distribute the money immediately (lump sum)

Your second option is to withdraw funds from your U.S. retirement accounts and use the proceeds as you wish. Assuming that you are older than 59 ½, you can access your funds without penalties. There are some significant downsides, though: 

First, a lump-sum distribution from your retirement accounts will likely be subject to income taxes at potentially much higher rates than would otherwise be the case when spreading withdrawals throughout your retirement years. The only exceptions are distributions of funds previously held in Roth IRAs or Roth 401(k)s. 

Next, you lose the tax-deferral benefits of keeping your investments in a retirement account until you need them. Future dividends, interest, and capital gains become taxable. 

 Finally, assets in retirement accounts are typically better protected from custodian defaults, personal bankruptcy, and liability claims than those held in an individual or joint taxable account. 

Leave the assets in the current account(s)

For most people retiring in France, we believe that leaving the assets in U.S. retirement accounts is the best option. However, it is not without issues:  Few banks, broker-dealers, or other U.S.-based financial institutions will allow you to keep your account once you move to a French address (401k sponsors do not). And those who do might restrict your investment options or even freeze trading unless a registered investment advisor manages the assets.
Aside from administrative issues, there are investment and currency considerations specific to spending your retirement in a foreign country while keeping your accounts custodied in the U.S. We highlighted several of these issues in a December 2020 post: “Managing Portfolios for Investors with Multi-National Needs.
The good news is that the U.S. has a tax treaty with France that facilitates the deferral of taxation and alleviates being taxed twice on the same income. If you spend some time in the U.S. during the year, be aware of state residency rules to avoid paying state income taxes as well.
Importantly, we believe that U.S. securities markets offer a greater variety of investment choices, better protection for individual investors, and very competitive costs.

To conclude, U.S. retirement accounts typically cannot be moved to an investment account in France without distributing the assets (paying taxes and possibly early withdrawal penalties). Therefore, many American expatriates opt to keep their retirement assets in a U.S.-based account to be drawn from as needed. Important considerations remain that most individual investors will find challenging. We highly recommend doing your homework and consulting with professional tax, legal, and investment advisors in advance of your move to avoid potentially costly mistakes.

Contact us to discuss your situation:


One of Bristlecone Value Partners’ principles is to communicate frequently, openly and honestly. We believe that our clients benefit from understanding our investment philosophy and process. Our views and opinions regarding investment prospects are "forward-looking statements," which may or may not be accurate over the long term. While we believe we have a reasonable basis for our appraisals, and we have confidence in our opinions, actual results may differ materially from those we anticipate. Information provided in this blog should not be considered as a recommendation to purchase or sell any particular security. You can identify forward-looking statements by words like "believe," "expect," "anticipate," or similar expressions when discussing particular portfolio holdings. We cannot assure future results and achievements. You should not place undue reliance on forward-looking statements, which speak only as of the date of the blog entry. We disclaim any obligation to update or alter any forward-looking statements, whether as a result of new information, future events, or otherwise. Our comments are intended to reflect trading activity in a mature, unrestricted portfolio and might not be representative of actual activity in all portfolios. Portfolio holdings are subject to change without notice. Current and future performance may be lower or higher than the performance quoted in this blog.

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