Returning to India by mid-end of 2019, need 401k advice

Mar 11, 2018 50 Comments

I maxed out 401k as long as I was with Microsoft (they pay 9k to 401k). I recently joined a bay area company. Job's great, they don't contribute to 401k tho, they provide some 401k account with a small financial institution, benefits seem to be none - just hold money pre tax.

I will sell real estate assets and investments in the US when I leave to India. Regarding 401k, I am uncomfortable leaving my money until I'm 60 (under 30 now) in a foreign country that could prevent anyone from entering at any point, but I am open to withdrawing over 1-2 years if there are huge tax benefits of doing so. Considering that I'm moving to India by mid-end 2019:

1. Should I continue to contribute to 401k like I did earlier? (Or just invest post tax money in US equities instead? Done decently okay - indexes seem to be doing great, trading account made 9.8% last 3 months)
2. If yes, do I continue to contribute into the Fidelity 401k account that Microsoft provided? Is that even possible from a different employer? Or do I start a new one with this small institution?

comments

Want to comment? LOG IN or SIGN UP
TOP 50 Comments
  • You have access to one of the greatest financial markets the world has ever seen. Leaving your money in place will allow you to grow your money exponentially over the next 30 + years (assuming you’re reinvesting dividends etc). People around the world would kill to have this opportunity. Leave it in place. Also continue to contribute. It’s a tax deferred account so you won’t need to worry about paying taxes on it until you’re withdrawing the money (assuming this is a traditional vs Roth IRA). You’ll also likely be subject to a 10% early withdrawal penalty if you take your money out before you’re 59.5 years. (Not sure of this given your situations). Just my two cents.
    Mar 11, 2018 7
    • True, but you have to weigh that against India’s inflation rate. They’re at 4.5% in a zero interest rate environment. Historically closer to 10%. Inflation is devastating to a portfolio.
      Mar 11, 2018
    • Google / Eng
      Hgjkv

      Go to company page Google Eng

      Hgjkv
      One reason you may want to keep 401k is you might be able to take loan for your kids if they planning on coming for education to US for BS or MS. I haven’t researched on it.
      Mar 11, 2018
  • Amazon
    AmazonSVP

    Go to company page Amazon

    AmazonSVP
    You really need to read the mad fientist blog and how to access your retirement funds earlier. Google Roth ira conversion ladder
    Mar 11, 2018 11
    • Amazon
      AmazonSVP

      Go to company page Amazon

      AmazonSVP
      No problem. You can pretty much do everything whitout paying taxes or very little. It's just a game you have to understand the rules.
      Mar 11, 2018
    • Amazon
      EjcQ46

      Go to company page Amazon

      EjcQ46
      Can you clarify what is tax treaty between us and India. Would we be taxed on Roth ladder below standard deduction. Would fidelity with old 30% based on us India tax treaty?
      Jan 28, 2021
  • Oracle
    Marx Herd

    Go to company page Oracle

    Marx Herd
    Consult a tax attorney. Call Fidelity at their retirement department. They are knowledgeable. Consider a rollover into an IRA. It is more flexible than a 401k on withdrawal reasons to avoid penalties, eg buying a home. Read pub 529 on IRS.gov. Look up India's tax rules on holding overseas accounts and if they give you a tax free window to bring in funds which are untaxed elsewhere. I see a giant Excel spreadsheet in your future. And good luck with your new chapter in India!
    Mar 11, 2018 2
  • Lyft
    aJiI82

    Go to company page Lyft

    aJiI82
    OP, strongly recommend you read relevant posts from r2iclubforums.com. Most answers in this thread ignore your immigrant status, you can check various strategies for 401k based on immigrant status at r2,iclubforums.
    Mar 12, 2018 1
  • Netflix
    abcabc123

    Go to company page Netflix

    abcabc123
    My general rule: leave the money in the account where it is growing until you actually need it.

    Do you have need for that money when you land in India? If you don’t then no pressing reason to liquidate imo.

    Secondly, when you no longer have US income, you will be in lowest income tax bracket that is the best time to withdraw with penalty from 401k. If you do it mid-late 2019 you are looking at higher tax bracket because you have income already that year. You may also withdraw with penalty slowly (spread over multiple years) to ensure you have income which is in lowest bracket each time you withdraw. Obviously depends on how much you have accumulated in 401k.
    Mar 11, 2018 3