What happens to your US brokerage account when you move to Costa Rica

I keep getting the same call. Someone in their late 50s or early 60s, based in the US, calls Fidelity or Vanguard or Schwab and says, "I'm planning to move to Costa Rica next year. What do I need to do with the account?" And the person on the other end of the phone goes quiet, then transfers them to someone else, then transfers them again, then eventually says, "Talk to a tax attorney."

That is not an answer. That is a brokerage that has no idea what to do with you.

Most major US custodians have a policy buried in their account agreement that says they cannot hold the account once your address of record is foreign. Some enforce it strictly, some look the other way for a while, and a few have built out international desks for specific countries. None of them will explain that clearly on a 20-minute call. The result is people show up to Costa Rica with a working brokerage account, change their address to update statements, and a few months later get an email saying the account will be liquidated or restricted in 60 days.

This is fixable. It just has to be planned before the move, not after.

What "no US address" actually triggers

The trigger is your address of record, not your physical presence. You can be sitting in Tamarindo for nine months a year. As long as the brokerage thinks you live in Florida, they keep treating you like a Florida resident. The moment you change the address to a Costa Rica street, an internal flag fires. Depending on the firm, that flag does one of three things:

• Restricts new buys (you can hold and sell, but not add)
• Liquidates the account on a 30-to-90 day notice
• Routes you to an international desk that has higher minimums and a different fee schedule

Fidelity has historically been one of the stricter ones. Vanguard has been very strict, especially with mutual funds. Schwab International exists, but you typically need over a quarter million in assets to use it, and not every account type qualifies. Interactive Brokers is the friendliest to expats by a wide margin and is often the right destination if you have to move accounts anyway.

The exact policies change. Verify with the firm before you act on any of this. None of them publish a clean public-facing page about it, which is half the problem.

The "keep a US address" workaround

The most common move expats make is to maintain a US address of record. This is legal as long as you actually have a domicile that supports it. It is not legal if you simply use a friend's mailbox and have no other ties.

Domicile, in US legal terms, is your true and permanent home — the place you intend to return to. You are allowed to have a domicile in one US state while spending most of the year abroad, but you need supporting facts: a driver's license, voter registration, vehicle registration, real property, family ties, a physical residence you can actually access. Mail-forwarding services alone are not enough and have triggered state tax disputes for people who tried to use a UPS Store as their entire footprint.

The states that work well for this are the ones without state income tax. Texas, Florida, South Dakota, Nevada, Tennessee, Washington, and Wyoming are the most common. South Dakota has built a small industry around mail-forwarding-plus-domicile services for full-time RVers and expats. Florida has the largest expat-friendly infrastructure. Texas works if you already have ties there.

If you currently live in a high-tax state — California, New York, New Jersey, Oregon — your state has aggressive rules about claiming you left. They will often try to keep taxing you as a resident for years unless you can prove you established domicile somewhere else. Read your state's specific guidance, because the threshold is much higher than "I moved." See California FTB Publication 1031 for a sense of how detailed this gets.

The accounts that actually need to move

Even with a clean US domicile in place, certain accounts get tricky once you spend significant time outside the US.

Taxable brokerage. Easiest to keep. As long as your address is US and you can verify your identity, most firms will leave you alone. Trade activity continues. The biggest risk is buying US mutual funds while you are physically in another country, because that can trigger anti-money-laundering flags. Switching to ETFs solves this for most people.

Traditional and Roth IRAs. These follow the same rules as taxable brokerage at most firms, but the account-restriction policies are stricter. If your firm restricts new contributions to non-US-address accounts, you cannot make annual IRA contributions until you fix the address.

401(k) plans. These live with your former employer or their record-keeper. Most are fine to leave alone. But if you want to roll one over to an IRA after you move, the receiving custodian may reject the rollover if your address is foreign. Roll it over before you leave.

HSA accounts. Most HSA providers cancel coverage entirely if your address goes foreign, because the underlying high-deductible health plan no longer applies. Move HSA balances to a self-directed HSA custodian that allows non-US addresses before the move if you want to preserve them.

529 college savings. Generally fine to maintain. State-specific tax benefits may not survive if you change domicile to a different state.

Crypto custodial accounts (Coinbase, Kraken, Gemini). Coinbase historically restricts accounts when the address changes outside their licensed jurisdictions. Verify before you move, or self-custody.

The Costa Rica side of the picture

You do not need a Costa Rican bank account to live in Costa Rica. You can run almost everything off a US credit card, US debit card with ATM withdrawals, and Wise or a similar service for larger transfers. Many expats go years without opening a local account.

You need a Costa Rican account when you become a resident and have to pay Caja, when you buy property and the seller wants the funds wired locally, or when you start earning Costa Rican income. Before that, it is optional.

Opening a local account before residency is harder than it used to be. Costa Rica's banking sector has tightened anti-money-laundering rules sharply in the last few years. Banco Nacional has a reputation for freezing accounts on incoming transfers with weak documentation. Private banks like BAC and Scotiabank are easier to work with for non-residents but ask for thorough source-of-funds proof — usually two years of tax returns and a CPA letter. Bring the documents. Do not show up assuming a US passport is enough.

Costa Rica does not tax foreign-source income. Your Social Security, your IRA withdrawals, your US brokerage capital gains — Costa Rica generally does not touch any of it. This is a real benefit and it is one of the reasons the country attracts retirees in the income range that brokerages otherwise make difficult.

Where the tax-bucket question fits

A separate question prospects ask in the same breath is, "Where should I pull my monthly income from once I am in Costa Rica?" The honest answer is, it depends on which account types you have and what your US tax bracket looks like that year. But here is the rough order of operations most expats follow:

1. Taxable brokerage first, especially if you have unrealized losses to harvest or low-basis positions you have been waiting to sell at a lower bracket. Long-term capital gains rates are 0% for a married couple with taxable income under roughly $96,700 in 2026 (per the IRS inflation adjustments). For many retirees living on $40,000 to $60,000 abroad, that 0% bracket is wide open.
2. Roth contributions, then Roth conversions. If your taxable income is genuinely low, this is the window to convert pre-tax IRA money to Roth at a 10% or 12% federal rate. You may never see that bracket again. Tax laws may change — verify the bracket thresholds the year you are doing this.
3. Pre-tax IRA / 401(k) distributions. After age 59 1/2, you can pull without penalty. After 73 you are required to take RMDs anyway.
4. Social Security. Filing timing is its own analysis. Most singles benefit from waiting to 70 unless they have a specific reason not to.

The FBAR rule matters here: any aggregate foreign account balance over $10,000 at any point in the year requires filing FinCEN Form 114 by April 15 (with automatic extension to October 15). The penalty for non-willful failure to file is $16,536 per violation in 2026, and willful is $165,353 or 50% of the balance, whichever is greater. This applies to the local Costa Rican account you may eventually open. Tax laws may change — verify with a qualified tax professional.

Who this works for and who it doesn't

The keep-a-US-domicile approach works cleanly for people who:

• Already lived in a no-state-tax state before moving
• Have family or property in a state they can point to
• Visit the US for several weeks a year and can keep ties active
• Have under about $1M in investable assets (above that, international banking starts to make sense as a diversification play, not just a custody issue)

It works poorly for people who:

• Cut every US tie and never plan to return
• Live in a high-tax state and try to skip out without establishing domicile elsewhere
• Have a Costa Rican spouse and most of their economic life on the Costa Rica side
• Hold most of their wealth in custody types (HSA, certain crypto, employer stock plans) that the new address will break

Common mistakes

• Changing the address before moving the accounts. Once the foreign address hits the file, you have a 30-to-90 day clock. Move accounts first, then change addresses, in that order.
• Assuming Schwab International is your fallback. It has minimums and not every account qualifies. Verify before you assume you are covered.
• Using a virtual mailbox with no underlying domicile. This is the single most common reason people get caught in state-residency audits years later.
• Forgetting the HSA. People remember IRAs and brokerage. They forget the HSA at their old employer's vendor. By the time they notice, the address change has already triggered the closure.
• Not filing FBAR the first year they open a Costa Rican account. The penalty is per-violation. Six years of non-filing can wipe out the account.

What to do next

If you are 6 to 18 months out from a move, this is the order to work through:

1. Decide on your US domicile state and start building the paper trail now — driver's license, voter registration, physical address.
2. List every US account you hold and call each custodian to ask what their policy is for non-US address of record. Get the answer in writing if you can.
3. Move any account that will not survive the address change. The most common destinations are Interactive Brokers, Schwab International (if eligible), or a custodian that explicitly supports your situation.
4. Roll over the old 401(k) before you go.
5. Build a one-page document for your CPA that lists every account, every address, and every change you made and when. You will thank yourself in three years when something gets audited.

If you want a second pair of eyes on your specific setup — which accounts to move, which state to domicile in, which buckets to pull from — that is what the diagnostic session is for. You can book at planwithvitality.com/contact or take the readiness quiz at planwithvitality.com/quiz to see where the biggest gaps are before booking.

This post is educational and does not constitute personalized investment, tax, or legal advice. Vitality Wealth Planning, LLC is a registered investment adviser. Tax laws change; verify current rules with a qualified professional.