U.S. 401k and Irish Pension

[millermayhem]

I am a US Citizen living/working in Ireland for 7 years.

I had a 401k for a number of years at my job in the US, prior to moving to Ireland. It currently has about 100k in it. I am no longer making contributions to this.

I am also contributing to and Irish pension via my employer here in Ireland.

My partner and I just bought a house in Ireland and obviously planning on being here for awhile.

What's the best thing to do with the 100k in the US 401k plan, with the goal to try and retire with as much money as possible? Can I transfer it to my current pension? Should I? Should I leave it and let it grow on its own?

After the house purchase, my partner and I still have 5-6 months net salary in savings (combined for both of us). So really just trying to figure out the best way to maximize the 100k sitting in the US 401k that I am no longer contributing to.

 

[banemlamgi]

@millermayhem If you want, you could roll over the 401k into an IRA. The fees are probably less that you paying your 401k provider.

I would probably try and do an estimation of what your net worth will likely be when you retire and what your exit taxes will be at that time. In general, investing in the US is cheaper that investing in Ireland, so maybe keeping the money there isn't a bad idea.

I would also check out the Americans in Ireland FB group. They are very helpful, and if nothing else, they can refer you to a good accountant. And since you just bought a house, you might need an accountant anyway to figure out how to file your US taxes.

 

[resjudicata]

@banemlamgi One big downside to rolling it over to an IRA is that you can no longer borrow from your pension in case you ever need to. 401(k) plans have the option that lets you borrow from it, IRAs don't.

 

[resjudicata]

@millermayhem Look into Roth conversion. You can basically turn that entire 100k into tax free money. It only works for US citizens though.

https://onlinetaxman.com/tax-free-roth-ira-conversion-expats-feie/

 

[millermayhem]

@resjudicata Thanks for that one - tax free is always good.

 

[roytheone]

@millermayhem Go see a professional about advice on this one.

 

[resjudicata]

@millermayhem If you plan on retiring in Ireland, it may we worth getting that pension denominated in EUR. Unfortunately I don’t know much about overseas transfers, but I’m guessing you’d need to check a) your US provider facilitates overseas transfers, b) your Irish provider accepts overseas transfers, and c) there’s no regulatory red tape in between. I think (a) and (b) could be answered easily with an email / phone call to the providers (they may be able to advise on (c) then as well). I’m not 100% sure on (c), but if this was an Ireland -> Non-EU transfer, you’d need signed letters from the original providers custodians / trustees basically saying these are genuine benefits. Perhaps the US operates something similar but that’s the part you’ll probably spend most of your time trying to figure out. Sorry can be much more help !

 

[resjudicata]

If you plan on retiring in Ireland, it may we worth getting that pension denominated in EUR.

I don't think there's much value to that. Your Irish pension is still likely invested in global stocks. If it's market cap weighted, up to 60% of the holding is already US stocks. The underlying stock movement is heavily linked to the US economy even if the fund is denominated in EUR.

Also, it's not an option for 401(k). You can't transfer. You'd be better off keeping it in the US since US pensions are much more competitively priced (i.e. have lower or no fees).