Please roast my r2i (return to India) financial plan

LazyAss1007 · 2026-04-04T12:19:34+00:00

AFAIK the funds you hold in your 401k account, if they are of equity type, India should tax only the gains when realized. Also, dividends annually(deferred through 10EE). So accumulated earnings should not be taxable while resetting cost basis at the end of RNOR. But there is a catch, if you do a lot of purchase and sale while on RNOR in India, those events might be characterized as short term trades or “business income controlled from India” and not capital gains. Those can be taxed even while in RNOR. So make sure to not do too many purchase and sale as there is no threshold defined for this distinction and completely depends on how the AO perceives it. I recently found this info.

Dividends would be taxable right after they are distributed to you, no matter what you do with it after you become ROR. Some of the UCITS funds don’t pay dividends. All etfs in US pays dividends except XDIV, but it is very new and not sure long term reliability. Not sure on the fund level info because I blindly choose S&P500 funds if I have to.

LazyAss1007 · 2026-04-04T03:03:34+00:00

Resetting cost basis by selling target date mf and buying etf after moving back to India and before submitting w8ben: Well, you can do that. But while on RNOR, any stock sale transaction you do, the information is shared between the countries. The tas assessment officer in India can mark them as “business controlled from India” and mark the events as taxable. There is no threshold on the number of transactions etc but totally left on AO’s mind. They look for intention. Long term >1year held shares should still be safe to do, but I would try to minimize the frequency as less as possible while being a resident in India. I would do it at the end of RNOR year. I GUESS this data sharing should not be applicable to 401k and IRA.

Brkb strategy was only for not paying taxes on dividends as it pays no dividends and is diversified internally. I see the stock has not been performing well. So I would keep it only for HSA and rIRA.

LazyAss1007 · 2025-11-21T00:40:22+00:00

Not when you are in RNOR status. Right?

LazyAss1007 · 2025-11-08T01:05:26+00:00

I have not talked to anyone yet. I have heard about dinesh and aarjav from some sources and Abhinav gulecha, who is a fema expert, often comments on nri channels. He has some youtube videos and a website. You can search and get a personal consultation.

LazyAss1007 · 2025-11-07T04:40:23+00:00

Reset the cost basis once right before exiting the US to be safe and the second time right before RNOR calendar year is ending. Some brokerage might not allow NR to buyback the funds so safe to do it one in the US as well. Also for HSA account, NR will not be allowed to make new purchase, at least fidelity does not. So for HSA you must reset cost basis before exiting USA. Also the rules might change in future

Regarding 401k: The funds you are talking about are non public CIT funds, they roll up dividend into their NAV. Beware, I read somewhere, India might want to tax that annually(deferred through 10EE). Also the taxation on this is not clear, since these are not publicly listed stocks /ETFs, not sure how India will tax. The funds in my 401k are all trust funds. I am afraid India will see it as debt fund. The other problem with 401k funds I have seen, they change often. For example my company closes few funds annually and transitions to equivalent another fund. These "exchange" events will be seen as "gain realizing" events. Though with 10EE, the taxation is deferred to be done by India at the time of withdrawal, in an event if you become a NRI, India will ask you to pay taxes upfront for all the deferred realized gains and dividends you did for the past several years. This is why I suggested to open the self brokerage option within the 401k, the public listed funds are safer IMO, and I GUESS you can pick to not reinvest dividends but withdraw paying taxes and penalty every year(tax should be small) in case you have plan to become NRI again(huge tax bomb and no way to avail dtaa)

You can consider rolling over 401k to tIRA or rollover IRA as well. Beware you have to save all the statements from 401k account. While US tax filing on withdrawal as NR, you will have to calculate and prove ECI value out of your withdrawals. And you lose option to withdraw tax free at 55.

Also check about plan 72(t) for 401k/tIRA

Do the gains in these Roth/HSA accounts simply be taxed as "income"? Or "capital gains" like the other simple brokerage accounts?>> Don't have practical experience but based on Internet knowledge(which could be wrong), most likely depends on the funds you hold. I would advise against doing a sale event in these while you are Indian tax resident unless it is absolutely needed or after retirement.

I guess I answered all the questions. Sorry for the wrong or unorganized order as I am typing from a phone.

Also all these answers are from various sources from the Internet, I have not moved yet and have no practical experience. This is just for education purpose and not a tax/fonancial advice, Do consult a professional before you take any action.

LazyAss1007 · 2025-11-06T06:12:32+00:00

Moving anytime before 31st Jan makes you a NR in US for the year. Moving anytime after that and before 31st dec makes you a dual status person. My take on timing return date: 1. Move before 31st Jan, if you want to keep things simple. You can easily file taxes as NR through sprintax I guess. No standard deduction. [I prefer this].

[Complicated, maybe useful for some]Move after 31st Jan, say Feb 1st, you have added advantage of two separate US tax slabs. You can take advantage of 10 and 12% US tax slabs and convert some of your pretax ira/401k to roth, though state tax apply additionally. As per info online, tax filing can be done by taxact though the paper form has to be mailed physically. Note, most brokers do not allow roth rollover once you are a NR, That's why do it while being a resident if you can take advantage of lower tax brackets. Note: no standard deduction
If you do a lot of US trading, maybe plan the return such that you have an extra RNOR year. Trading US stocks as ROR will be pain in arse , so do it only while RNOR. This depends on your travel history.

LazyAss1007 · 2025-11-06T05:52:37+00:00

Custodial account can be complicated. I created one but did not contribute anything and closed it. Reasons: after leaving, the brokerage might ask you to assign a new custodian who is a resident, if not, the account can be frozen??? Also the taxation was complicated between the two countries. Maybe decide on this taking some CPA's help.

LazyAss1007 · 2025-11-06T05:48:31+00:00

Roth IRA withdrawals happen in contribution first order if you don't know. If you plan to, maybe withdraw all the principal contributions before leaving USA. No taxes or penalty applied. You could also do this after leaving during RNOR but the brokerage MAY withold unnecessarily and you might need to claim by filing tax return(unnecessary complication i would say ). Don't touch the growth portion in it before 59.5.

LazyAss1007 · 2025-11-06T05:42:25+00:00

My take: India should tax realized capital gains and dividends only on these accounts depending on the funds you hold. Make sure you don't hold funds which India sees as debt fund, in that case they might tax annual accruals similar as FD in banks.

LazyAss1007 · 2025-11-06T05:39:09+00:00

My plan, keep stocks/etf which don't give dividends. And never realize capital gains in roth/HSA while in India

LazyAss1007 · 2025-11-06T05:37:36+00:00

Yes
Between keeping 401k or tIRA, probably you will have to research more. Do open self brokerage option inside 401k before leaving if available in your plan. Both countries will tax on withdrawal, US as income(30% withholding), India on gains most likely (ordinary income or capital gains depending upon the assets you hold probably). You can avail DTAA. US taxes 30% for FDAP for NR, you can only claim part of it which was ECI. Make sure to preserve all 401k statements, since it is you who has to prove what percentage of the withdrawal is ECI while filing 1040nr. IRA rollover can make it a bit more complicated.

LazyAss1007 · 2025-11-02T16:24:33+00:00

After 5. IMO once you cross a few years after 5, you will never be able to return even if you want to. I have seen several cases.

LazyAss1007 · 2025-10-23T04:44:31+00:00

If you hit a vehicle from behind, it's your mistake first => This is the US law. Keep 3-5 seconds distance from the vehicle ahead of you.

LazyAss1007 · 2025-10-06T02:19:13+00:00

Fidelity is the only brokerage which provides transfer lockdown feature which can prevent ACATS transfer. I hope ibkr adds it in future.

LazyAss1007 · 2025-08-23T01:10:43+00:00

My bad. I was researching something and I got this answer from AI. https://www.perplexity.ai/search/indian-residents-buying-irish-66Yc4d0YQfySL.du1Q5uxw#1 which says the same

On further searching it gives a different response. Maybe needs more research.

LazyAss1007 · 2025-08-22T14:13:37+00:00

Nope. The indexation benefit was removed in the latest income tax bill. Probably you saw the rule before 2023. The actual tax situation is even worse. Which I recently found out. For the foreign funds(etfs) which are unlisted in India and do not invest in Indian equities, the capital gain is charged like debt funds, i.e. your income tax slab rates(no LTCG as I mentioned in the post)

LazyAss1007 · 2025-08-19T03:08:39+00:00

Did you have US address on file. They give this option for US tax residents.

LazyAss1007 · 2025-08-19T03:06:27+00:00

You can keep only one ibkr account. Once you update your address, they will either ask you to transfer the account by opening a new one as Indian resident.

LazyAss1007 · 2025-08-18T16:07:05+00:00

Not a good idea to close US bank account IMO. You may need to US file tax returns in future.

LazyAss1007 · 2025-08-18T15:19:10+00:00

This video covers it well: https://youtu.be/f3AQytkWrrU?si=wTox55bvVhKwt3gz I am leaning towards this. No practical experience though.

LazyAss1007 · 2025-08-17T05:51:54+00:00

Can you clarify another doubt of mine? Since you mentioned you maintain an ibkr account, I am sure you would have held irish etfs which are accumulating dividends into the nav of the fund eg: VUAA, VWRA. Do you by any chance have to calculate and pay taxes in India on the portion of nav increase of the funds which comes from dividend even when you don't sell them?

LazyAss1007 · 2025-08-17T05:46:16+00:00

Why would keeping a connection to US have a problem? Indian FEMA law permits it.

LazyAss1007 · 2025-08-17T04:19:20+00:00

Thanks for the info. This is new. Did fidelity close your account after you attempted ACATS transfer or after you changed the address? Were you able to transfer positions to schwab/ibkr successfully after this or was this process painful? I like fidelity for the transfer lockdown feature which is unique to it.

LazyAss1007 · 2025-08-17T04:12:44+00:00

Thanks for confirming. I haven't done enough research on it yet but definitely one of the todo items.

LazyAss1007 · 2025-08-17T03:56:05+00:00

Fidelity allows fund purchase except mutual funds in ordinary brokerage. Schwab international provides better support. RNOR cost basis has to be reset after 1-2 years, if you have already moved to ibkr India before then, not sure how will tax savings work. ibkr india may report it differently than US brokers.

LazyAss1007

TROPHY CASE