1️⃣ Banking & Credit Accounts — Simplify Before You Move
“The first step is consolidation — less is more when managing from abroad.”
- Freeze your credit with Equifax, Experian, TransUnion to prevent SSN misuse.
- Keep only 1–2 active U.S. bank accounts with minimum balances and small recurring activity to avoid dormancy.
- Port your U.S. number to Google Voice (one-time ~$20) to keep OTP/verification access abroad. Test OTPs per bank/broker; switch to email-based OTP where possible.
2️⃣ U.S. Credit Cards — Keep At Least One Active
“Credit history is your invisible passport — don’t close it unless you must.”
- Retain one no-foreign-transaction-fee card (e.g., Chase Sapphire, Capital One Venture).
- Keep light monthly usage (streaming, small subscriptions) to preserve credit history and benefits.
3️⃣ Brokerage & Stock Accounts — Keep or Close?
“If you plan to keep trading, know your tax filing obligations.”
- NRIs can usually retain U.S. brokerage accounts (Fidelity/Schwab/Vanguard), but non-resident trading can trigger withholding and ongoing U.S. tax filing.
- Consider pausing active trading or transitioning to Indian mutual funds/ETFs after relocation.
What should I do with my 401(k) and IRA when returning to India?
Your retirement accounts are among your most valuable assets, and you have several options for managing them after moving to India. The right choice depends on your age, tax situation, and long-term financial goals.
Can I keep my 401(k) after moving to India?
Yes, you can keep your 401(k) after moving to India. You have three main options:
- Leave it with your former employer — This gives you less control and potentially higher fees, but requires no immediate action. Your money continues to grow tax-deferred in the US.
- Roll over to an IRA at Fidelity, Schwab, or Vanguard for broader investment choices and lower expense ratios. This is the most popular option because it gives you full control over your investments and typically lower fees.
- Cash out (not recommended) — Avoid early withdrawals before age 59½ as you'll face a 10% penalty plus income tax. This can cost you 30-40% of your balance in taxes and penalties.
According to the IRS guidelines on 401(k) distributions, you can maintain your account regardless of where you live, as long as you follow the distribution rules.
Learn more about 401(k) rollover strategies for NRIs returning to India to make the best decision for your situation.
How is a Roth IRA taxed in India?
Roth IRAs have special tax considerations when you move to India that many NRIs overlook:
- Tax-free in the U.S. but not tax-exempt in India — While Roth IRA withdrawals are tax-free in the US, India doesn't recognize this special status. Your withdrawals may be taxable in India as regular income.
- If you're considering a Roth conversion (401(k) → Roth IRA), plan it during your RNOR window for optimal taxation. The RNOR status can help you avoid or minimize Indian taxes on the conversion.
- The US-India tax treaty doesn't specifically address Roth IRAs, creating ambiguity. Work with a cross-border tax advisor to navigate this complexity.
For detailed guidance, explore our comprehensive guide on Roth IRA taxation for NRIs in India.
What is RNOR status and how can it help me save on taxes?
Resident but Not Ordinarily Resident (RNOR) is a special tax status that typically applies for the first 2–3 years after you return to India. This is one of the most valuable tax benefits available to returning NRIs, yet many people don't take full advantage of it.
How does RNOR status work?
RNOR status gives you the best of both worlds — you're considered a resident of India for visa and living purposes, but you get special tax treatment on foreign income:
- During RNOR, much of your global income may be tax-exempt in India. Specifically, foreign income that doesn't accrue or arise in India is not taxable, even though you're a resident.
- This is the ideal time to restructure or withdraw from your 401(k)/IRA with better cross-border tax outcomes. You can potentially avoid Indian taxes on these withdrawals during your RNOR years.
- RNOR status is determined by your residency history over the past 7-10 years. According to Indian Income Tax rules, you qualify if you've been a non-resident in 9 out of the 10 preceding years, or if you've been in India for 729 days or less in the preceding 7 years.
- Use this window strategically for Roth conversions, capital gains realization, or restructuring your investment portfolio. The tax savings can be substantial — potentially hundreds of thousands of dollars for high-net-worth individuals.
For a detailed breakdown, read our guide on maximizing RNOR tax benefits for returning NRIs.
7️⃣ Step-by-Step: Financial Checklist for Returnees
✅ Before Leaving the U.S.
- Freeze credit reports.
- Port phone to Google Voice.
- Roll over 401(k) → IRA.
- Download SSA & IRS statements.
- Notify financial institutions of address change.
✅ After Arriving in India
- Update/maintain NRE/NRO accounts.
- Set up CPA coordination for dual-country filings.
- Begin RNOR planning and structured withdrawals.
8️⃣ Key Takeaways
- Consolidate accounts and keep access (phone/OTP) ready.
- Keep at least one no-FX-fee U.S. credit card active.
- Use the RNOR window for tax-efficient moves.
- Prefer IRA rollovers for control and lower fees.
- Stay compliant in both countries — use pros when needed.
Frequently Asked Questions
Q: Can I keep my 401(k) after moving to India?
A: Yes, you can keep your 401(k) after moving to India. You have three main options: Leave it with your former employer (less control, potentially higher fees, but no immediate action required), roll over to an IRA at Fidelity, Schwab, or Vanguard for broader investment choices and lower expense ratios (most popular option), or cash out before age 59½ (not recommended due to 10% penalty plus income tax). According to IRS guidelines, you can maintain your account regardless of where you live, as long as you follow the distribution rules.
Q: How is a Roth IRA taxed in India?
A: Roth IRAs are tax-free in the U.S. but not tax-exempt in India. While Roth IRA withdrawals are tax-free in the US, India doesn't recognize this special status, and your withdrawals may be taxable in India as regular income. If you're considering a Roth conversion (401(k) → Roth IRA), plan it during your RNOR window for optimal taxation. The RNOR status can help you avoid or minimize Indian taxes on the conversion. The US-India tax treaty doesn't specifically address Roth IRAs, creating ambiguity, so work with a cross-border tax advisor to navigate this complexity.
Q: What is RNOR status and how can it help me save on taxes?
A: Resident but Not Ordinarily Resident (RNOR) is a special tax status that typically applies for the first 2–3 years after you return to India. During RNOR, much of your global income may be tax-exempt in India. Specifically, foreign income that doesn't accrue or arise in India is not taxable, even though you're a resident. This is the ideal time to restructure or withdraw from your 401(k)/IRA with better cross-border tax outcomes. You can potentially avoid Indian taxes on these withdrawals during your RNOR years. RNOR status is determined by your residency history over the past 7-10 years. You qualify if you've been a non-resident in 9 out of the 10 preceding years, or if you've been in India for 729 days or less in the preceding 7 years.
Q: Can I collect US Social Security while living in India?
A: Yes, you can collect U.S. Social Security payments while living in India. Eligibility requires 40 credits (approximately 10 years of covered work in the US). Benefits can be direct-deposited to Indian banks approved by SSA, making it convenient to receive your monthly payments without delays. Payments remain taxable U.S. income and may also be taxable in India depending on your residency status. You must report your foreign address to SSA and complete periodic verification forms to continue receiving benefits.
Q: Should I close my US bank account when moving to India?
A: No, you should keep 1-2 active US bank accounts even after moving to India. Freeze your credit reports with Equifax, Experian, and TransUnion to prevent identity theft. Keep only 1–2 active U.S. bank accounts with minimum balances and small recurring activity (like a Netflix subscription) to avoid dormancy flags. Banks may close accounts with no activity for 6-12 months. Port your U.S. phone number to Google Voice (one-time fee of approximately $20) to maintain OTP and verification access from India. Update your address with all financial institutions to your Indian address or use a trusted US address to receive important mail.
Q: Should I keep my US credit cards after moving to India?
A: Yes, you should absolutely keep at least one US credit card active after moving to India. Your credit history is valuable and takes years to build, but can be destroyed in months if you close all your accounts. Retain one no-foreign-transaction-fee card such as Chase Sapphire Preferred or Capital One Venture. Keep light monthly usage with automatic payments (streaming services, small subscriptions) to preserve your credit history. Avoid closing old credit cards as this reduces your average account age and can significantly lower your credit score. Set up autopay to avoid missing payments while living abroad.
Q: Can I keep my US brokerage account after moving to India?
A: Yes, NRIs can usually retain their US brokerage accounts with major firms like Fidelity, Schwab, and Vanguard. However, non-resident trading can trigger 30% withholding tax on dividends and interest income, plus ongoing U.S. tax filing requirements. You'll need to file Form W-8BEN to claim treaty benefits under the US-India tax treaty, which can reduce withholding rates on certain types of income. Consider pausing active trading or transitioning to Indian mutual funds and ETFs after relocation to simplify your tax situation. Some brokerages may restrict certain investment options for non-US residents, including mutual funds and options trading.
Q: What should I do with my 401(k) before leaving the US?
A: The best strategy is to roll over your 401(k) to an IRA at Fidelity, Schwab, or Vanguard before leaving the US. This gives you broader investment choices, lower expense ratios, and full control over your investments. Rolling over while still in the US is easier because you have better access to customer service, can handle any paperwork issues in person, and can verify everything is set up correctly before you leave. Avoid cashing out before age 59½ as you'll face a 10% penalty plus income tax, which can cost you 30-40% of your balance.
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✍️ Editorial Summary
This FAQ simplifies what many NRIs overcomplicate: how to move money, not mistakes. From keeping your U.S. credit alive to using the RNOR window wisely, a structured plan makes your financial transition as smooth as your flight home.
“Leaving the U.S. is emotional. But managing your money doesn’t have to be.”
6️⃣ Social Security — Still Eligible While Living in India
Understand SSA eligibility & coordination →