Is 401K A Good Option For H1B Visa Holder?

[Chitralekha]

It is often difficult to make decisions about future, especially when you are thirty or forty years away from your retirement. However, the years do fly especially after the age of thirty five and if you had an extremely busy life raising a family coupled with a demanding career. So, if you are thinking of a good retirement plan then 401(k) and Roth IRA are very good options to consider.

What is a 401(k) and Roth IRA?

401(K):

401(k) is an employer-sponsored retirement plan. Employee’s contribution to the 401(k) plan will get deducted from their paycheck every time before taxation. In many cases, Employer will match up to some percentage of Employee`s contribution.

Employee’s contribution to the 401(k) plan will be invested in funds based on your choice. It is tax-deferred which means, you are not going to pay taxes until you withdraw the money.

Roth IRA:

Roth IRA is an individual retirement plan. Contribution to the Roth IRA will get deducted after taxation. So, no need to pay taxes at the time of withdrawal.

 

Is 401k a good option for a H1b visa holder?

Absolutely yes, contributions to 401(k) plan is a very good option for H1b visa holders. If your employer is offering 401(k) then it is highly advisable to join the plan for the below reasons.

• Contributions to the 401(k) plan are free from State and Federal taxes. You have to pay taxes only when you withdraw. If you are in a lower tax bracket when you retire, you will        be paying less taxes.
• If your employer is also contributing to the employee’s 401(k) plan, this is Free Money! You are getting a ROI of 100% for every dollar your employer matches. Where else can you get 100% ROI?
• 401(k) plan allows you to take loans against the money you have contributed to this plan. Loans will be issued for financing a home, health problems etc.
• 401(k) plan allows withdrawal of money during financial hard times. 10% penalty will be charged for an early withdrawal before the age of 59.5 years.

Here is an example for “Investing in 401(k)” VS “Not Investing in 401(k)”:

• Your Salary: 100k
• Employer Match : 100% match up to 4% of your Annual Salary
• Taxes: 30%

Investing in 401(k) Scenario:

• Your Contribution: 4% of 100k = $4,000
• Employer Match: 4% of 100k = $4,000
• Total Contribution: $4,000 + $4,000 =$8,000

If you want to withdraw after one year, you will be paying 10% penalty and 30% taxes. So you will get 60% 0f $8000 = $4800

If you don`t invest in 401(k):

You will be paying 30% taxes on $4000. You will be left with 70% of $4000 = $2800.

$4800 vs $2800. You decide 

[always_happy116]

GP

[aakpak_karepak007]

Hmmm

[ipaddress0]

[vatchesa]

Inni rojulu, e vishayam teliyaka tesukoledu
Ipudu year middle lo istado ledo

[UNITED99]

Inni rojulu, e vishayam teliyaka tesukoledu
Ipudu year middle lo istado ledo

 you can join 401k anytime 

[zzeb]

Inni rojulu, e vishayam teliyaka tesukoledu
Ipudu year middle lo istado ledo

As far as i know at any point of time you can start contributing to your 401k plan if offered by the company. Check with your plan administrator just to be sure.

[Bhalegunde]

employer match chesthene 401(k) lo pettandi..endukante limited investment options untaayi kaabatti

if company match lekapothe..better max out ur ira and roth ira before thinking about 401(k)

[vatchesa]

Asigite, join avochu but employer mana contribution ki match cheyaru,,, only for retirement ani edo annaru, ardam kaledu
Teliste plz explain

[Dippam]

emp match untene 401k best lekapote manaki lite

[Chitralekha]

GP

 

 

FT vallakee Helpful aa Happy? maa employer  chesthadu anta kani 0% matching annadu... still proceed avvocha???

 

I heard Home loan theskovachu ani chadhivaa ekkado... 

[Chitralekha]

emp match untene 401k best lekapote manaki lite

 

 

I asked same question.. Maa employer cheppadu..  kontha limit ayyaka... you can take money as Loan.. I suggest you to be in 401k PLan annaru..

[Hyderabad_Nawab]

Employer Match cheste 401k is always better - dat was one of da Main FTE benefits....

[Chitralekha]

Employer Match cheste 401k is always better - dat was one of da Main FTE benefits....

 

 

One of the Kaadhu.. Only Benefit ani cheppukovachemo..    and health Insurance 

[Hyderabad_Nawab]

One of the Kaadhu.. Only Benefit ani cheppukovachemo..    and health Insurance 

nee moham em kaadhu.. inka chaala untaai.. neeku cheppalsina avasaram ledhu..

sample ga okati.. 21 Holidays.. almost >1M Paid Holidays.. Vacation ki..