401k, ISA and brokerage
when moving back to India

Keep, roll, or close? The decisions you make in the six months before departure determine how much of your foreign wealth survives the move. Sequencing matters more than any single asset decision.

Updated May 2026 · 10 min read

Sequencing beats optimising — sell in the right order, not the right asset

Most people treat investment decisions before a move as "what should I sell?" The better question is "when should I sell, and in which country?" The RNOR (Resident but Not Ordinarily Resident) period gives you a window where India does not tax your foreign capital gains. Gains you realise after your RNOR period ends get taxed in India at normal slab rates plus surcharge.

The correct sequence: first, ensure your brokerages are accessible from India (deal-breaker if not). Second, do not sell appreciated positions before you leave — let them sit during RNOR. Third, time 401k distributions and pension drawdowns for after age 59½ when US withholding tax drops and the DTAA (Double Taxation Avoidance Agreement) credit makes the math work. Fourth, crystallise gains in tax-efficient wrappers (Roth IRA, ISA-equivalent positions already de-wrapped) during RNOR, not after.

Your 401k and IRA — leave alone during RNOR

Leave it The 401(k) and traditional IRA are among the most mishandled assets in a return-to-India move. Many NRIs cash out early, triggering a 10% penalty plus ordinary income tax in the US, plus Indian tax on what remains. That combination can cost 50–60% of the account value.

The right approach: leave the 401k invested. If your employer plan allows it, keep it. If not, roll it into a traditional IRA at a portable broker — Interactive Brokers (IBKR) or Schwab both work from India. IRA accounts have no employer-plan portability restrictions.

Once you are in India, 401k and traditional IRA distributions are subject to 30% US withholding tax for non-resident aliens. Under the India-US DTAA, you can claim that 30% as a foreign tax credit against your Indian income tax. If your Indian slab rate is 30%, the credit eliminates double taxation. The practical problem is that US custodians withhold first and you reclaim via Indian returns — which requires filing correctly in both jurisdictions.

Wait until age 59½ if possible — the 10% early withdrawal penalty disappears, leaving only ordinary US income tax plus the DTAA credit mechanism. If you are well under 59½ and the account is large, speak with a cross-border tax specialist (a US-India dual-qualified CPA, not just any accountant) before doing anything.

UK pension — defined benefit vs defined contribution

Leave it Leave your UK pension alone. Both defined benefit (DB) and defined contribution (DC) pensions are designed to be drawn at pension age — typically 55–57 in the UK, rising to 57 in 2028. Early access triggers heavy tax charges.

Under the India-UK DTAA, UK pension income for Indian residents is generally taxable in India (not the UK), but the specifics depend on whether the pension is a government scheme or a private scheme. Government pensions (NHS, teachers, civil service) have a different treaty treatment and are usually taxable only in the UK. Check your specific scheme against Article 17 and 18 of the India-UK DTAA.

Some UK employers allow continued pension contributions from abroad if you remain on payroll or have deferred vesting — useful if you have unvested employer contributions. Once you are no longer employed in the UK, contributions stop but the pot stays invested. A SIPP (Self-Invested Personal Pension) is the most portable option — consolidate multiple DC pots into a SIPP before leaving if your employer permits.

UK ISA — the wrapper disappears the day you leave

Action required The ISA (Individual Savings Account) tax wrapper is a UK-resident benefit. The day you become non-UK resident, your ISA loses its tax-free status for UK tax purposes. You cannot contribute to an ISA as a non-UK resident.

What this means: your existing ISA holdings do not get forcibly sold, but future gains and income are no longer sheltered from UK tax. More importantly, gains realised by an Indian resident are potentially taxable in India. During your RNOR period, foreign capital gains are not taxed in India — so if you want to de-wrap your ISA and crystallise gains, do it during RNOR, not after.

The practical options: keep the ISA open and manage it as a standard taxable account (a GIA, or General Investment Account), or sell holdings before you leave if they are showing large gains and you want to use your UK CGT (Capital Gains Tax) annual exempt amount (£3,000 for 2025/26) while you still have it. Do not close the account in a rush — ISA providers will allow the account to remain open for non-residents, just without the wrapper benefit.

US brokerage — IBKR, Schwab, Fidelity

IBKR is the correct answer for almost every returning NRI who wants to maintain US market access. It supports Indian residents explicitly, handles multi-currency accounts, and has the lowest foreign exchange conversion costs of any major broker. Do the ACATS transfer 4–6 weeks before you leave — not the week before.

RSUs and employee stock — check the vesting cliff before you hand in notice

Check timing Restricted Stock Units (RSUs) are one of the most overlooked financial decisions in a return move. If you have unvested RSUs with a cliff 3 or 6 months away, leaving early can cost you significantly.

Steps to take: get the full vesting schedule from your HR or Carta dashboard. Calculate the dollar value of unvested stock at current price. Compare that against any personal or family urgency to move sooner. Many NRIs negotiate a move date that clears the next vest — this is not unusual and most US employers accommodate it.

On the broker side: RSUs vest into shares held at your employer's designated broker — typically Fidelity NetBenefits, E*Trade (now Morgan Stanley at Work), or Schwab Equity Awards. Once vested and released, you can transfer the shares to IBKR via ACATS. Check whether your employer's plan restricts transfers before you exit — some do.

Carta specifically requires you to update your address, which triggers KYC revalidation. Do this after you have sold or transferred shares you want to liquidate — an address update to India can trigger account review that temporarily restricts trading. Tax on RSU vesting at the time of grant is usually handled by your employer via withholding — but gains between vest and sale are yours to track.

NRE fixed deposits — let them run to maturity

Leave it Your NRE (Non-Resident External) fixed deposits earn interest that is currently tax-free in India. After you return, your NRE account must be redesignated to a resident savings account — but existing FDs that were opened as an NRE FD retain their tax-free status for the original tenure of the deposit.

Do not break them early. Early-exit penalties on FDs typically cost 0.5–1% of the interest rate, and you lose the tax-free status for the broken portion. If a large FD is maturing within 6 months of your planned return, consider whether to extend or let it run out and then reinvest in a regular resident FD after you land.

Once your accounts are redesignated (NRE → Resident Savings, NRO → Resident), interest on new deposits is fully taxable in India. Plan your reinvestment accordingly — GIFT City accounts (covered in the next guide) offer USD-denominated FDs at 4–5% that may suit returnees wanting to maintain USD exposure.

The sequencing summary

• 6 months before: Transfer Robinhood/Vanguard/E*Trade holdings to IBKR via ACATS. Check RSU vesting schedule. Confirm Schwab or IBKR address update plan.
• 3 months before: Check ISA unrealised gains — use remaining UK CGT allowance if helpful. Get vesting schedule confirmed in writing from HR.
• 1 month before: Do NOT update brokerage address to India until after any pending ACATS transfers complete. Do NOT cash out 401k. Confirm Roth IRA balance and tax basis.
• After landing (RNOR window): Realise ISA gains and Roth gains tax-efficiently. Hold US appreciated positions until RNOR expires if possible — no Indian CGT applies during RNOR on foreign gains.
• After RNOR ends: Indian CGT applies to all foreign gains at normal rates. Plan drawdown of 401k via DTAA credit mechanism with a qualified cross-border CPA.