What happens to your 401(k) when you move to India.

Legally, nothing. Your 401(k) is a US account in your name, and moving abroad does not close it, freeze it or force a withdrawal. You keep the money, it keeps its tax-deferred status in the US, and you choose later whether to leave it, roll it over or take it out, subject to your plan's own rules.

The account belongs to you, not to your visa. Whether you came on an H-1B, an L-1 or a green card, your vested balance stays yours after you leave the employer and after you leave the country. Unvested employer contributions are the one part you can lose, and that is decided by the plan's vesting schedule on your last day of work, not by the move.

What does change is the paperwork around it. The plan administrator will want a current mailing address, may ask for a new tax form once you are no longer a US tax resident, and may limit what you can do online from an Indian IP address or phone number. None of that touches the balance, but all of it is easier to arrange before you board the flight than after.

The real decisions are about tax and access: when you take the money out, which country taxes it, and how it reaches you in India. The rest of this post walks through those in the order most returnees meet them. It is general information, not tax or investment advice, and your own position depends on your residency, your plan and your age.

Usually, yes. Most plans let a former employee leave a vested balance in place indefinitely, provided it is above the plan's small-balance threshold. Below that, the plan may pay it out or move it into an IRA without asking you. Ask the administrator what their threshold is before you leave your job.

Leaving the money where it is has real advantages. It keeps growing without US tax until you withdraw it, it avoids any cost of moving it, and it postpones the decision until you know your Indian tax position. For many returnees, the plain answer to "what should I do with my 401(k)?" is "nothing yet".

The disadvantages are practical. You cannot keep contributing once you have no US earned income, the investment menu is whatever the old employer chose, and some plans are slow to deal with former employees who live abroad. Fees on a plan you no longer work for are worth checking too, because they come out of the balance every year whether you look at it or not.

Keep the login, the account number and the administrator's phone number somewhere you can reach from India, and make sure two-factor codes do not go to a US phone number you are about to cancel. A retirement account you cannot log in to is still yours, but recovering access from abroad can take weeks of calls and notarised forms.

Often not. Cashing out before age 59½ usually means ordinary US income tax on the whole amount plus a 10% additional tax, and the plan withholds part of it up front. Withdrawing in the year you also earned a US salary can push the money into a higher bracket. Decide with a cross-border accountant first.

The instinct to close everything in the US before leaving is understandable: one less account to track, and the money is in India where you can see it. But a 401(k) withdrawal is taxable income, and the year you leave is often the worst year to take it, because your US salary for the months you worked that year is already in the same return.

A worked example with round numbers: someone under 59½ withdraws a balance in the same year they earned most of a US salary. The withdrawal is added on top of the salary, taxed at their highest marginal rate, and then the 10% additional tax applies to the whole amount. Taking the same money in a later year, with no US salary beside it, can be taxed at a lower rate in the US, although India may then have a claim on it too.

There are good reasons to cash out anyway: a small balance not worth tracking, a plan that will not deal with overseas addresses, or a genuine need for the money in India. The point is to make it a decision with numbers in front of you, not a box ticked in the last week.

Sometimes. The IRS lists exceptions to the 10% additional tax, and the one that most often helps returnees is separation from service in or after the year you turn 55. Others cover disability, certain medical costs and substantially equal periodic payments. Income tax still applies to the withdrawal itself in every case.

The age-55 exception applies to the 401(k) of the employer you leave, not to an IRA. Roll the money into an IRA first and the exception no longer applies to it, which is one reason not to roll over in a hurry if you are in your mid-fifties.

Substantially equal periodic payments let you take a fixed series of withdrawals calculated from your life expectancy, without the penalty, at any age. They are rigid: change the schedule early and the penalty comes back on everything taken so far, with interest. They suit few returnees, but they exist.

Moving abroad is not itself an exception. Nor is buying a home in India or paying school fees. The IRS page on early distributions lists every exception and which account types each one covers, and it is the page to read with your accountant before you rely on any of them.

It can make sense, and doing it before you leave is easier. An IRA usually offers wider investment choices and lower fees than an old employer plan. But some US brokers restrict or will not open accounts for customers living abroad, so confirm the provider will keep serving you with an Indian address first.

Use a direct rollover, where the plan sends the money straight to the IRA provider. If the plan pays you instead, it withholds tax, and you have 60 days to deposit the full amount, including the part that was withheld, or the shortfall becomes a taxable distribution.

Ask the IRA provider a specific question: "Will you keep my account open and let me trade and withdraw once my address is in India?" Policies differ by firm and change over time. Some allow existing customers to stay with restrictions on what they can buy; others ask non-resident customers to close or move the account.

Consolidating several old 401(k)s into one IRA has a quieter benefit: fewer logins, fewer statements and fewer tax forms to chase from India each year. Weigh that against the age-55 exception covered above, and against any plan features, such as stable-value funds or low institutional fees, that an IRA cannot copy.

Withdrawals from a traditional 401(k) are US-source income, so the US taxes them even after you leave. If you are no longer a US tax resident, the plan generally withholds tax at the nonresident rate unless a treaty rate is claimed on Form W-8BEN. US citizens and green card holders stay taxed as residents wherever they live.

Your US tax status after the move matters more than your passport. A US citizen, or a green card holder who has not formally given up their card, keeps filing a US return as a resident and reports the withdrawal on it, wherever they live. Someone who held a work visa and has left generally becomes a nonresident alien for the years after their departure, once they no longer meet the substantial presence test.

For a nonresident, the plan administrator acts as the withholding agent. Form W-8BEN is how you certify that you are a foreign person and claim any treaty benefit you are entitled to. Without it, plans tend to withhold at the highest applicable rate, and getting the excess back means filing a US return.

The year you leave is often a dual-status year: resident for part of it, nonresident for the rest. That return is more involved than either kind on its own, and it is where most returnees are best served by an accountant who files on both sides. IRS Publication 515 covers withholding on payments to foreign persons.

It can, once you become ordinarily resident. India taxes a resident's worldwide income, which can include 401(k) withdrawals and, in principle, the growth inside the account. Indian law has a provision to defer tax on notified foreign retirement accounts, including US ones, until withdrawal. Confirm how it applies to you before filing.

India's tax status for individuals has three tiers: non-resident, resident but not ordinarily resident (RNOR) and resident and ordinarily resident. Only the last is taxed on income from everywhere. The Income Tax Department's non-resident pages explain the day-count tests that decide which tier you fall into in a given year.

The mismatch people worry about is timing. The US taxes a 401(k) only when money comes out, but an Indian resident could otherwise be taxed on income accruing inside the account each year. Section 89A of the Income-tax Act, 1961, introduced to address this, lets a resident elect to have that income taxed in India in the year it is taxed in the US, for accounts in notified countries, which include the United States.

India's new Income-tax Act, 2025 applies from 1 April 2026, and returnees should check with their accountant how the deferral is carried into it and which forms elect it. This is general information, not tax advice; the official FAQ and a chartered accountant are where the specifics belong.

Many returnees consider it. While you are RNOR, income that arises outside India is generally not taxed in India, so a withdrawal in those years may be taxed only by the US. RNOR usually lasts about two Indian tax years for people returning after a long stay abroad, but your own dates decide it.

The appeal is simple: one country taxing the money instead of two arguing about it. But the US side does not go away. A withdrawal during RNOR years is still US-source income, still subject to US withholding, and still subject to the 10% additional tax if you are under 59½ and no exception applies.

So the RNOR window does not make a withdrawal tax-free. It may make it taxed once rather than twice, and it may let you take it at a time when you have no US salary pushing up your US bracket. Whether that beats leaving the money to grow for twenty more years is an investment question as much as a tax one.

Write down the dates you were in India in each of the last ten years before you meet your accountant; the RNOR tests are a day count. The site's RNOR guide explains them in more detail. Then plan withdrawals, if any, around the years your status actually gives you, not the years you assume it does.

The India-US treaty has an article on pensions and similar payments, and it decides which country may tax what, while each country credits tax paid to the other. How it applies to a lump-sum 401(k) withdrawal, rather than a regular pension, is not settled in a sentence. That is accountant territory.

Treaties exist to stop the same income being taxed twice in full. In practice that works through two levers: a treaty article saying which country has the right to tax a type of income, and foreign tax credits letting you offset tax paid in one country against tax owed in the other on the same income.

On the Indian side, a resident who has paid US tax on income also taxed in India can usually claim credit for it, and the claim has its own form and deadline. On the US side, a treaty position that reduces withholding is claimed on Form W-8BEN or on the return itself, and a position taken on a return may need to be disclosed.

The IRS publishes the full India treaty text and its technical explanation. Read it with an accountant who handles both countries' returns. The cost of a professional opinion is usually small next to the tax on a retirement balance, and the questions here turn on details this post cannot know.

In the US, qualified Roth withdrawals stay tax-free wherever you live. India does not automatically follow US treatment, though, and once you are ordinarily resident, India may view Roth growth differently from the US. Treat a Roth account as tax-free in the US only, and confirm the Indian position before relying on it.

A qualified Roth distribution generally needs the account to have been open for five years and you to be 59½ or older, disabled or deceased. Those US rules do not change when you move; what changes is that a second country now has its own view of the same money.

Contributions you made to a Roth were from income already taxed, so they are your own capital. The open question in India is the growth. Some returnees take Roth money during their RNOR years to sidestep the question; others leave it, accepting some Indian uncertainty for decades of US tax-free compounding.

Roth conversions before you leave are another lever some advisers raise: paying US tax now, at known rates, to make later withdrawals tax-free in the US. It is a real strategy and a complicated one, and it belongs in a conversation with your accountant rather than in a blog post.

Generally yes, once you are resident and ordinarily resident. Indian residents disclose foreign assets, including foreign retirement accounts, in the foreign assets schedule of their income tax return, even when no income from them is taxable. RNOR and non-resident filers are generally not required to. Missing the disclosure carries its own penalties.

Disclosure is separate from tax. You can owe nothing in India on a 401(k) in a given year and still be required to list it. The schedule asks for the institution, the account, the peak and closing balances and the income credited, so keep the annual statements that show them.

The US has its own reporting for the reverse case. A US citizen or green card holder living in India who holds Indian bank accounts may need to file an FBAR with FinCEN and Form 8938 with the IRS. Those forms are about your Indian accounts, not your 401(k), but they arrive in the same years and catch out the same people.

Make a short list each year: every account in either country, its number, its institution and its year-end balance. It takes an evening, it serves both countries' forms and it is what any accountant will ask for first.

Required minimum distributions from a traditional 401(k) or IRA generally start at age 73 under current US rules, rising to 75 for people born in 1960 or later. They apply whether you live in the US or India. Missing one costs an excise tax on the amount you should have withdrawn.

If you are still working for the employer that sponsors the plan, RMDs from that plan can usually wait until you retire, but a returnee working in India will have left that employer, so the standard age applies. Roth 401(k)s no longer require lifetime distributions; Roth IRAs never did.

Planning for RMDs matters for returnees in their forties and fifties too. A large traditional balance left to grow for twenty years becomes large required withdrawals later, each taxed in the US and possibly in India. Some people deliberately take smaller withdrawals earlier, in low-tax years, to keep later ones down.

The IRS page on required minimum distributions has the current ages and how the amount is worked out. The rules have changed twice since 2019, so check the page rather than a figure you remember from a colleague.

Have the plan pay the withdrawal into your US checking account, then send it to your own Indian account through a regulated transfer service. Compare providers on the rupees that arrive, not the fee line. On a large amount, plan the transfer weeks ahead, because limits and bank debits both take time.

Most plans pay by direct deposit to a US bank account or by cheque to your address on file. A cheque posted to India is slow and hard to deposit, so keep a US checking account open, in your own name, specifically for this.

ComplyRemit sends from that account at the mid-market exchange rate, the one you see on Google, with any fee shown on the review screen before you confirm. You link the account through Plaid, add your own Indian account under Send to yourself, and the account is checked with the bank before its first payout. The debit from your US bank takes one to three business days to clear, then funds are typically delivered within 48 hours.

Your limits are shown in the app. Adding your Social Security number raises them, and an enhanced review can lift a single transfer to as much as $50,000. Send a small test amount first, and keep every confirmation: you will want them for tax filings in both countries.

Five things: confirm your vested balance and the plan's small-balance rule, update your address and contact details, decide with an accountant whether to keep, roll over or withdraw, keep a US checking account open for any payout, and save every statement and login. Then leave the money alone until the plan is clear.

Three to six months before you go, book the accountant. The answers on rollover, RNOR timing and treaty positions all depend on your dates and balances, and the person preparing your last US return and your first Indian one should hear them early.

In the last month, download the final paystub, the latest plan statement and any tax forms already issued. Note the plan's phone number and the name of anyone who helped you. Switch two-factor authentication to an email or an authenticator app, not a US SIM.

After you land, file a reminder for every January: US tax forms for the previous year arrive then, and they are the starting point for both countries' returns. The 401(k) will still be there. Leaving it untouched while you settle in is a perfectly good decision.