IndianLady1,
I did exactly what SriVidya explained. Converted it to a Roth IRA after moving back to India..
Btw, what is your immigration status. If you are a US citizen/GC holder, you may keep your roth IRA till you turn 59.5 and start drawing from it for your retirement.
I too hope the IRA may be of some use to my LO if she choses to go back to the US for studies or otherwise. Btw, if you are planning to with draw, then the best time will be to withdraw in chunks after relocating to India(yearly 15K or so till you exhaust it). Assuming you will be earning in INR, if your income is below the annual foreign income of USD90K p.a(as of this year - it may change in 5 yrs) your Indian Income will be exempt from taxes. If you are not in the tax bracket your early withdrawal penalty significantly reduces(I'm not sure what # it will be but around 10-15 is what I remember reading somewhere).
I have touched upon it here -
US Citizens moving to India .Of course, my research was only for USCs. If you are not going to be getting US citizenship then you should research your options.
I am still not sure of the tax implications in India if you choose to withdraw and bring it into the country. Here is a thread in R2I club forums discussing 401(k)/IRA -
401K, IRA - General Questions - R2IClubForums. This is a good resource for any finance related queries for people relocating, taxes et al may be discussed here. Btw, I highly recommend Suze Orman's book for 2009. I learned all about Roth IRA conversions from the book and it was easy to understand. It was available online, but I just cannot find the link right now.
HTH,
L