A 401(k) and a Roth IRA don't need to be touched, closed, or moved when you leave the US — both can generally sit exactly where they are, held under your existing account, indefinitely. What changes is which country's tax rules apply to them once you're a tax resident of India again, and that's where the two accounts diverge in ways that catch people off guard.
401(k) and traditional IRA: Section 89A gives you a matching deferral
India's default rule for foreign accounts is to tax growth as it accrues, which would be a mismatch with the US 401(k)/IRA regime that defers tax until withdrawal. Section 89A of the Income Tax Act, introduced specifically to fix this mismatch, lets residents holding retirement accounts in notified countries — the US, UK, and Canada are the countries most consistently named in current guidance — elect to have India also tax the account only on withdrawal, matching the US treatment, rather than taxing paper gains every year. The election is made annually via Form 10-EE. Get this wrong or skip the election and the commonly described consequence is that India taxes your 401(k)'s year-over-year growth on an accrual basis even though you haven't touched the money — a materially worse outcome. Whether the notified-country list has changed since last confirmed, and the exact mechanics of the Form 10-EE election, are worth checking directly rather than assuming — this is a relatively new provision and guidance is still settling.
Roth IRA: the genuinely unsettled case
This is where hedging matters most. A Roth IRA's US selling point — qualified withdrawals are entirely tax-free because you already paid tax on the contributions — doesn't obviously translate into Indian tax law, which has no native concept of an "already-taxed, now permanently tax-free" account. Some secondary sources describe Section 89A as extending to Roth IRAs on the theory that the account was opened while you were a US resident and the statute is meant to align timing generally; others flag a specific tension, namely that the relief is framed around income that is taxable on withdrawal in the foreign country — which a qualified Roth withdrawal, by design, is not — leaving it ambiguous whether the deferral election even applies, or whether India instead taxes Roth withdrawals as ordinary income or capital gains in the year received regardless of their US-tax-free status. Multiple sources describe this area as genuinely unresolved in practice, with tax professionals still working out a consistent position. Treat any confident claim about Roth IRA treatment in India — including this one — as provisional, and get a cross-border preparer's current read before making decisions, especially around Roth conversions timed to your move.
Where the US-India treaty fits — and where it doesn't
Article 20 of the treaty addresses private pensions and is commonly cited as giving taxing rights to your country of residence — meaning once you're an Indian resident, the treaty framework points toward India as the primary taxing jurisdiction on these distributions, not the US. But two caveats matter. First, the US "saving clause" generally lets the US keep taxing its own citizens and green-card holders as if the treaty didn't exist; some sources describe pension provisions as specifically carved out of the saving clause, making the treaty's residence-country rule effective even for US citizens/green-card holders, while others describe that carve-out as narrower, applying only to certain paragraphs of Article 20, not private pension annuities generally. This is a genuinely contested reading, and it matters enormously for US citizens and green-card holders specifically (as opposed to NRIs who hold neither status) — this is a case where "confirm with a cross-border tax preparer" isn't boilerplate, it's the actual answer. Second, even where the treaty helps avoid double taxation, it typically does so via a foreign tax credit mechanism rather than eliminating either country's filing obligation — you'd still likely file in both places.
The RNOR window as a planning consideration
Returning NRIs commonly qualify for RNOR status for roughly two to three financial years after their return, based on how many of the preceding years they spent outside India (see our RNOR article for the mechanics). During this window, foreign income that isn't remitted to India is commonly described as exempt from Indian tax — which some sources point to as a planning opportunity for Roth conversions or retirement account decisions made while still RNOR, on the theory that Indian tax exposure is temporarily reduced. This is worth raising with a cross-border planner well before your move rather than acting on from a general description like this one — the RNOR qualification rules themselves have reportedly seen recent changes, and getting the qualifying-year count wrong undoes the whole strategy.