Im on F1 visa. I had been opting out of 401k for about 6 month to pay off my loans quickly. Now I want to enroll back into 401k. There are many options like 1. Before tax base pay 2. Before tax perf pay 3. Roth 401k base pay, 4. Roth 401k performance pay 5. After tax base bay 6. After tax perf pay. And there is some option called deferral maximizer. I'm not sure of any of these. which option should I chose. I'd like to contribute the max which is 18k. I'm also not sure if I'd be staying in USA more than 6-8 years. So is it even worth to start contributing.?
A 401K account is YOUR money and YOUR savings which you can use wherever you end up in the world. So the answer to your last question is definitely yes, given the tax advantages.
I disagree since op said they plan to leave the country in few years. Unless op would be eligible to withdraw without penalty (based on age) at that time, or willing to leave the money in 401k until 59.5 years agree, I would recommend just contributing enough to get company match. The tax penalty for early withdrawal will make it less desirable to contribute more than that.
The math here is simple. OP contributes 9k Company adds 3k match. Op now has $12k OP lease country OP withdraws $12k Pays 10% penalty Walks away with $10.8k Why is this bad? This even assumes a low Company match and zero percent growth.
Just remember that if you are to withdraw before 59 1/2 you will be taxed at a higher tax bracket..
Look for rnor and ror status. You should talk to a financial adviser.
Max it out. Even if you have to withdraw it early, a 10% penalty on money that has been growing tax free for 6-8 years is likely better than what you'll pay now. And even if you leave the US, can you wait until you have zero US income to withdraw it?
It can also fall in value. And no tax lost harvesting.
I would max out the employers contribution, let the money grow till you are 59
What’s your tax bracket? If it is low, invest in Roth
Come under 24% bracket
Bad advice. Tax deferred always trumps paying taxes.
Max it out. Convert to Roth when you don’t earn and withdraw 5 years later tax free
Make sure u check vesting policy for your company as if you leave before vesting date of company contributions you are going to lose all the free money.
That’s why I always invest unvested 401k contributions at maximum risk. (50% emerging market, 50% small cap). If it does very well, I may delay my departure from the company. If it tanks, who cares. It becomes a non-factor in my departure.
F1 visa. What's going to happen when it expires? For some countries it's no issue. For others it's a headache. Might want to find out.
You can always withdraw your money from the US regardless of your Visa status.
Yeah but what's the tax impact, you may be forced to pay a penalty for early withdrawl. I don't know the answer in the OP's case but if I were the OP I'd want to know. In the case of my country there is a tax treaty that says my 401k and IRA will retain their tax protected status when I go home. However HSA and college funds will lose their protection. So I max out my retirement accounts but don't accumulate in those other accounts. I gather this can be different for every country based on the tax treaty it has with the US, so I suggest the OP learn what is the case for his country.
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Does your company have any matching? It's free money so your be foolish not to take advantage of that.