Your old 401(k): move it while you still have a US address.

Edition 15 · The account you stopped checking, and what it costs to leave it there

Manish Hemrajani
October 04, 2026

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The Rundown

Your old plan can move your money without asking. Under $7,000, the plan can roll your balance into an IRA at a provider it picks. Under $1,000, it can mail you a check, and the IRS taxes that check whether you cash it or not. Most lost accounts vanish this way.

A foreign address can lock you out of a US brokerage. Every firm has its own rule, and almost none publish it. Some block new purchases. Some close the account. Ask yours now, while you still live here.

Nonresidents lose 30% of every distribution. The plan withholds it from the first dollar unless you have a Form W-8BEN on file. Nobody will remind you. You get the excess back a year later on Form 1040-NR.

Take the money in one transfer and you lose the treaty. Article 20 of the India-US treaty covers pensions paid in installments. A lump sum falls outside it.

Above $60,000, your heirs pay US estate tax. The IRS treats a 401(k) as a US asset. Die as a nonresident alien and your exemption is $60,000, not the millions a US resident gets. India has no estate tax treaty with the US to raise it.

THE DEEP DIVE

The 401(k) you left behind

Count your former US employers. Now count the 401(k)s you still have with them. For many readers, the second number is higher than they’d like.

While you’re living here, an old account doesn’t cause any issues. Move to India, and that changes. Almost every fix below takes a morning from a US address. From an Indian one, some take months, and a few you can’t do at all.

1. Find every account

Start at lostandfound.dol.gov. The Department of Labor launched this database in December 2024, listing accounts that employers have reported as unclaimed.

Next, check your own records. Old W-2s show you the employer. Old statements reveal the plan administrator. If someone bought the company, its benefits department can usually trace the plan. Also, search the National Registry of Unclaimed Retirement Benefits and your state's unclaimed property office.

Two dollar limits explain most missing money. A plan can push a balance under $7,000 into an IRA without your consent, at a provider it chooses. That IRA usually sits in a money market fund earning very little. SECURE 2.0 set the $7,000 limit in 2024, and it doesn’t rise with inflation. For amounts below $1,000, the plan can just mail a check. The IRS taxes it, adds a 10% penalty if you’re under 59½, and doesn’t care whether you deposited it.

Playbook Move: Search under every spelling of your name and every Social Security number you’ve used. US payroll systems often misspell Indian names, and a different spelling won’t match.

2. Your four choices

You can leave it, roll it to an IRA, roll it into your current employer's plan, or cash it out. Each option plays out differently once you stop being a US resident.

Cash it out? Almost never. You’ll pay income tax on the full balance at your top rate, plus 10% if you’re under 59½. The money stops growing tax-deferred for good. On a $120,000 balance, the tax bill can exceed $45,000.

Roll it into an IRA. This gives you the most control, and it’s the step that gets hardest once you leave. Request a direct transfer from the plan to the IRA provider. If the plan writes the check to you instead, it keeps 20%, gives you 60 days to deposit the full amount, and leaves you to cover the missing 20% from your own savings.

3. When your address changes

Every brokerage and plan administrator sets its own rules for clients abroad. Some keep your account open but stop new purchases, allowing you to sell but not rebalance. Some block mutual funds that aren’t registered for sale outside the US. A few will ask you to move the account.

Some large brokerages have separate international firms that accept clients in India. Open one before you leave. Opening one from India means more paperwork, more delays, and more chances for rejection.

Then there’s your phone. Most US financial firms send login codes by text to a US mobile number. Cancel that number, and you could lose access to your retirement money. Getting back in usually requires US identification and a call during New York business hours, which is the middle of the night in Mumbai.

Keep the number. Before you cancel your US plan, move the number to Google Voice. Google charges a one-time $20 fee, and you must start the move while your mobile plan is still active. Google Voice runs over the internet, so it works from India, and you can have it forward every text to your email.

It has two limits. Some banks and brokerages refuse to send codes to internet phone numbers, and texts from short codes—those five- or six-digit numbers firms use—sometimes never arrive. Google can also reclaim a number that sits unused for months. Make a call or send a text from it now and then.

Playbook Move: Before you cancel your US mobile plan, move the number to Google Voice and turn on text forwarding to email. Then log in to every US financial account and check that the code arrives. Where it doesn’t, switch that account to an authenticator app before you leave. Ask each custodian in writing what happens to your account if your address changes to India, and keep the reply.

4. US tax after you leave

Once you become a nonresident alien for US tax purposes, the plan withholds 30% of every distribution, starting from the first dollar.

Form W-8BEN cuts that rate. It claims treaty benefits and provides your tax ID. It’s free and takes less than an hour. Nobody will ask you for it. Most people learn about it when a distribution arrives 30% short.

Article 20 of the India-US treaty covers pensions paid in installments and gives the taxing right to the country where you live. Monthly or quarterly payments qualify. A lump sum does not. If you take it all at once, both countries tax it, and you’ll spend the next year claiming foreign tax credits to undo the overlap. Set up installments instead.

W-8BEN alone doesn’t guarantee zero withholding. The plan's classification of the payment, the type of distribution, and the treaty's savings clause all affect the result. The 10% penalty for withdrawals before 59½ still applies after you move.

Overwithheld? File Form 1040-NR after year-end. Your refund arrives about a year later, with no interest

5. Indian tax after you return

India taxes your 401(k) based on your residential status, which changes on a set schedule.

Most returning NRIs start as Resident but Not Ordinarily Resident (RNOR). You qualify if you were non-resident in nine of the ten years before you came back, and this status usually lasts two to three years. During RNOR, India doesn’t tax income earned outside India. Use those years; they’re the cheapest time to take money out.

After RNOR, you become Resident and Ordinarily Resident (ROR), and India taxes your worldwide income. India used to tax the yearly growth inside a 401(k), even though the US taxes nothing until you withdraw. Section 158 of the Income Tax Act, 2025, the old Section 89A, fixes this mismatch: you pay Indian tax in the year you withdraw, the same year the US taxes you. You have to ask for it. File Form 40, the old Form 10-EE, before the return due date for the first year it applies. Miss that date, and you lose the option.

If both countries tax the same withdrawal, claim India's foreign tax credit on Form 44, the old Form 67.

Once you are ROR, list the 401(k) in Schedule FA of your Indian return. If you leave it out, Section 43 of the Black Money Act allows a ₹10 lakh penalty for every year, even if you owe no tax. The penalty doesn’t apply if your foreign assets, other than real estate, total ₹20 lakh or less, about $20,800. Almost every 401(k) exceeds that.

Compliance Alert: India has never clarified how it taxes a Roth IRA. Section 158 shifts Indian tax to the year the US taxes the withdrawal, and the US never taxes a qualified Roth withdrawal. Some chartered accountants file Form 40 for a Roth anyway. Others tax the yearly growth once you are ROR. The CBDT has issued no guidance. Until it does, don’t treat your Roth as tax-free in India.

6. The $60,000 estate tax limit

For estate tax, the IRS counts your 401(k), your IRA, your US-listed shares, and your US-registered ETFs as US assets. Where your brokerage account is located makes no difference.

If you die while domiciled in the US, your exemption runs to several million dollars. If you die as a nonresident alien, it’s $60,000. Congress set that number in 1976 and has never raised it. Your executor files Form 706-NA, and the estate pays up to 40% on everything above $60,000.

Domicile depends on where you intend to live, not on how many days you spend there. Buy a flat in Bengaluru and tell your colleagues you’re not coming back, and you’ve probably given up US domicile, even if you still have a US bank account open. India has no estate tax treaty with the US, so nothing raises the limit and nothing offsets the tax.

On a $400,000 401(k), $340,000 is exposed. Your family gets that bill while also trying to persuade a US firm to wire money to an Indian address.

Playbook Move: Check the beneficiary on every US retirement account you own. It costs nothing, overrides your will, and your family in India can claim an account with a named beneficiary without going through US probate.

7. One account, two countries

How the same 401(k) works while you live here and after you return to India.

Playbook Move: Consolidate now. Rolling three old 401(k)s into one IRA takes a morning while you still have a US address, a US phone number, and US tax residency. Once you leave, every step takes weeks. The estate tax is the same whether you hold one account or four, but one account is far easier for your family to claim.

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Disclaimer. NRI Playbook is for informational purposes only and does not constitute financial, tax, legal, or immigration advice. We are not registered investment advisors, tax preparers, or attorneys. Information reflects our editorial perspective at the time of writing. For decisions about your specific situation, consult a qualified cross-border tax professional, financial advisor, or immigration attorney. Past performance is not indicative of future results. Market data may be delayed or revised.