Even financially savvy expats fall into traps when it comes to U.S. retirement accounts abroad. Here are the five most costly — and how to avoid them with smart expat financial planning.
1. Ignoring Treaty Paperwork
Result: 30% default withholding on distributions.
Solution: File W-8BEN and maintain a treaty position memo.
2. Buying Foreign Funds in Retirement Accounts
Result: PFIC exposure → up to 37% punitive tax.
Solution: Stick to U.S.-domiciled ETFs even when abroad.
3. Misunderstanding Roth Seasoning Rules
Result: Double taxation when local law ignores Roth tax-free status.
Solution: Coordinate Roth withdrawals with local tax treatment.
4. Missing Custodian Red Flags
Result: Forced distributions with 25–40% immediate tax hit.
Solution: Secure custodian letters before relocating.
5. Overlooking Estate Collisions
Result: Beneficiary designations overridden by local forced-heirship laws.
Solution: Add trust overlays and QDOT provisions where required.
Expat wealth management is about anticipating these pitfalls and structuring around them before they cause damage.
➡️ Next Step: Avoid these costly mistakes. Schedule your complimentary 15-minute consultation with EWMS and get a cross-border risk check.
Disclaimer: This material is for education only. It does not constitute personalized tax, legal, or investment advice. EWMS educates expats and refers to licensed advisors for execution.
