I will be starting a new job next month. I will be on a visa and want to know the pros and cons of maxing out 401k. Please share a perspective of someone who is on visa and not someone who is a citizen
1. If your company does a match, it’s free money. 2. If you can hold the investments till retirement age, then you can potentially save taxes. 3. If you would need to withdraw before retirement, then you pay taxes as well as penalty. So check all the rules and do the math.
If you plan to withdraw it, It only makes sense if your employer matches your contribution or at least some part of it. You will be paying a 10% penalty plus you will be taxed on the amount which was earlier exempted.
Not really. If OP left US, they could withdraw in a year when their US income is zero, and only get away with minimal tax bracket + 10% penalty
The benefits are the same, regardless of whether you have visa or not. It's a tax efficient way to save for retirement.
If you decide to leave the country for good, you still have money the pull out. Remember you get contribution from your employer and 401k grows as it is invested.
Pros: your taxable income is reduced and you pay lesser % in tax , company match will be free money.
You pay less tax. And you'll be saving.
How much does it affects the taxes I am going to pay?
If you make 50000 but contribute 10000 you only pay tax on 40000. When you withdraw the 401k you pay tax but it will have grown and you will probably be in a lower tax bracket during retirement