A cross-border guide to managing your U.S. retirement savings from Europe
If you’ve built up a 401(k) while working in the United States and are now planning to retire or live in Portugal, you might be wondering what happens to your retirement savings once you relocate.
While 401(k) plans are one of the most common retirement vehicles in the U.S., managing them from abroad comes with unique challenges.
US retirement accounts are subject to strict tax rules and reporting requirements, and living overseas adds layers of complexity—including potential double taxation, currency exposure, and withdrawal considerations.
If you are moving to Portugal with a 401(k), this guide explains what to do with it, how it may be taxed, what alternatives exist, and how to stay compliant while protecting your retirement savings.
This article is for:
Whether you’re heading to Lisbon, the Algarve, or Porto, the financial implications of holding a 401(k) abroad are worth understanding—especially if you’re also considering Portugal’s NHR (Non-Habitual Resident) tax regime.
Portugal has emerged as a top destination for American retirees and digital nomads, thanks to its mild climate, high quality of life, and favorable tax regimes like the Non-Habitual Residency (NHR) program.
The number of Americans living in Portugal has surged in recent years, with approximately 14,000 U.S. citizens now calling Portugal home—a significant increase from just a few thousand before the COVID-19 pandemic.
Several factors contribute to Portugal’s appeal:
However, bringing a US-based retirement plan like a 401(k) requires careful navigation. Without the right planning, you could face unnecessary taxation, compliance issues, or even difficulty accessing your funds from abroad
Yes. You don’t have to liquidate your 401(k) or if you move it abroad.
Yes, but U.S. taxes will still apply—and there may be Portuguese tax implications as well.
Often, yes—especially for greater flexibility and investment choice. But it depends on your situation.
It might. This depends on how and when you withdraw funds, and whether you qualify for favorable tax regimes like the NHR.
If you want to optimize taxes and avoid costly mistakes—absolutely.
A 401(k) is a US-based employer-sponsored retirement plan designed to help employees save for retirement in a tax-advantaged way. If you’re moving to Portugal or already living abroad, it’s important to understand how your 401(k) works, both in the U.S. and in an international context.
Here are the key features and considerations:
Yes. Moving to Portugal doesn’t require you to close or cash out your 401(k). U.S. citizens and green card holders can legally maintain retirement accounts in the U.S., even as tax residents elsewhere.
If you’re moving to Portugal, you generally have three main options for handling your 401(k):
Not all U.S. financial institutions allow foreign residents to maintain or manage 401(k) or IRA accounts. Due to compliance and regulatory issues, some financial institutions may freeze trading or even close accounts once they learn you’re living abroad.
Likewise, customer service can be limited when you’re outside the U.S. More importantly, any changes to your investment strategy may require a U.S.-licensed advisor—many of whom are not authorized to serve expats.
Planning ahead helps prevent costly disruptions and ensures you remain compliant on both sides of the Atlantic.
A 401(k) is a powerful savings vehicle, but once you leave your job, it may no longer serve your long-term needs. Rolling over to an IRA can provide:
And for expats, there’s another advantage: several—though not all—U.S. brokerage firms allow IRA accounts with a foreign address, while employer-sponsored 401(k) plans often have more restrictions.
That said, not every provider allows non-U.S. residents to open or maintain IRAs.
A cross-border advisor, such as the wealth managers at Private Client Consultancy, can help you find the right custodian and structure the rollover to avoid tax pitfalls.
Now, let’s discuss one of the biggest concerns we hear for expats when moving to Portugal: taxes.
While the U.S. and Portugal have a tax treaty, it does not include specific provisions for retirement accounts. That means 401(k) withdrawals can be taxable in both countries unless careful planning is done.
Under Portugal’s standard tax rules:
The U.S. retains taxing rights on distributions regardless of your residency, though you may be able to claim foreign tax credits to avoid double taxation.
Under the former NHR rules, foreign pension income was often tax-free in Portugal. But since 2020, most new residents pay a flat 10% tax on foreign pensions, including 401(k) distributions.
While still favorable, the 10% rate isn’t automatic—you must apply for NHR and follow the rules closely.
Also, timing is essential. A lump-sum withdrawal might be taxed differently than a regular monthly draw.
That’s why planning ahead is key.
Living in Portugal means spending in euros—while your retirement account is likely invested in U.S. dollars.
That introduces currency risk: if the dollar weakens against the euro, your
withdrawals lose purchasing power.
To manage this:
A thoughtful investment strategy should account for both global markets and your future spending needs.
If you live in Portugal and are a tax resident, you must declare your worldwide income, including any distributions from a 401(k).
You may also be subject to:
It’s also critical to ensure that any advisor managing your 401(k) is aware of Portuguese reporting rules, particularly if they plan to reinvest funds or make changes on your behalf.
This is where a cross-border financial advisor’s expertise can pay off, saving you time and money and alleviating your concerns.
Assuming your 401(k) is tax-free under NHR
Failing to report U.S. withdrawals to Portuguese authorities
Keeping funds entirely in USD without a euro strategy
Working with an advisor unfamiliar with cross-border planning
401(k) accounts can be kept after moving abroad, but may come with restrictions.
Consider whether a rollover to an IRA offers better long-term flexibility.
Currency and custodian limitations need to be factored into your decision.
The Portuguese tax treatment of 401(k)s is nuanced, especially under NHR.
Managing a 401(k) from Portugal isn’t just about picking the right funds. It’s about navigating two tax systems, two currencies, and two regulatory environments—all while protecting your long-term goals.
A cross-border advisor can help by:
The bottom line? You’ve worked hard to build your retirement savings. Now it’s time to make sure your money works just as hard for you—no matter where you call home.
Your 401(k) doesn’t need to stay behind when you move abroad—but it does require thoughtful planning. From the lack of tax treaty protections to shifting Portuguese tax rules and potential investment restrictions, managing U.S.-based retirement savings while living in Portugal can quickly become more complicated than expected.
Navigating life in Portugal with a U.S. retirement account takes planning, but it doesn’t have to be overwhelming. With the right guidance, you can make the most of your 401(k), stay compliant in both countries, and enjoy your next chapter with confidence.
Whether you’re in the early stages of planning your move or already soaking up the Portuguese sunshine, we’re here to help. If you hold a 401(k) and are wondering how best to align it with your life abroad, don’t hesitate to reach out to Private Client Consultancy, so that we may offer you wealth management with peace of mind.
Disclaimer: Tax laws, rates, and reliefs are subject to change and may vary depending on individual circumstances and residency status. Any information provided on this website is based on our understanding of current regulations (or the date of when the content was published) and should not be considered personalised financial or tax advice. As tax obligations can differ across regions, countries and evolve over time, we strongly recommend seeking professional advice tailored to your specific situation before making any financial decisions.
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