Non-resident Indians (NRIs) living in the United States, moving back to the United States mumbai In 2024, after spending 28 years in New York, he went viral on Reddit after sharing the portfolio they hoped to build before returning to India.
in a discussion RedditOne user pointed out that most investment guides for NRIs fail to address a key point: U.S. citizens and green card holders still need to pay taxes to the IRS (IRS) affects their global income even if they move to India. However, HT.com was unable to independently verify the veracity of the Redditor’s claims.
To simplify planning, this Reddit user suggests breaking down your investments into three categories: money you plan to spend in India, long-term dollar wealth that doesn’t need to be converted into rupees, and a bridge cash reserve for the first two to three years after the move.
An investment worth keeping
Among investments in India, users recommend using NRE fixed deposits for short-term rupee needs and investing directly in Indian stocks through NRE-PIS or NRO non-PIS accounts instead of Indian mutual funds, despite the US tax on interest.
The post said Indian mutual funds triggered U.S. Passive Foreign Investment Company (PFIC) rules, which could lead to significant tax increases and reporting complications.
The Reddit user then talked about NPS Tier I’s low expense ratio and tax benefits on Indian taxable income, while recommending making an FCNR(B) deposit before returning to India to reduce foreign exchange risk.
On the U.S. side, Reddit users advised against closing 401(k) and traditional IRA retirement accounts, saying they could continue to offer tax benefits upon returning to India if the required filings were completed. The post further recommends keeping U.S.-registered ETFs such as SPY, VTI, VOO and QQQ, as well as brokerage accounts with firms like Schwab and Fidelity.
Investments to avoid
This Reddit user strongly warns against investing in Indian mutual funds due to PFIC taxation. The post recommends avoiding marketing of unit-linked insurance plans (ULIPs) to returning NRIs, claiming that high fees and unfavorable US tax treatment reduce its appeal.
High-yield NRI bonds issued by lesser-known companies are on the avoid list, with users warning that attractive interest rates often come with higher default risk.
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The Reddit user concluded that if starting over, they would first maximize US pension contributions, keep US brokerage accounts active, open FCNR(B) deposits before moving, use NRE term deposits for short-term needs, and invest directly in Indian stocks instead of mutual funds.
The post resonated with many users, who praised its detailed categorization and requested similar investment guidelines for NRIs returning from countries such as Australia, UK and European countries. Others sought clarification on topics such as Roth IRA taxation and the treatment of future 401(k) withdrawals under U.S. and Indian tax rules.
