Unfortunately my name wasn't selected in this year H1-B lottery and this was my last chance. My STEM OPT expires feb 2023 and I'm wondering whether I should stop contributing to the 401k or not?
Anybody who has faced this situation, or is facing it right now? What did you do?
I started 401k late and only contribute 4% have around ~6k in it, by end of year I should have ~12k. I don't plan to retire in US but definitely hoping that I might come back for a few years in the future.
Also if I ever want to get my money out while not in the USA and before 57, will I have to pay a plenty even now that my visa is gonna expire.
#personalfinance #investments #401k #taxes #h1b #amazon
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comments
If you don't have any annual income in US, you can take out upto 30K a year from your 401K at 10% tax. No other penalty.
If you don't put money in 401K you pay taxes. This amount is pre-tax and some of it is put in by your employer. Kind of free money.
You should definitely put as much as you can.
Man you need to learn to Google more. I'll pip you if I'm your manager. 🍌🍌🍌
Since this wasn't income from when you were a resident of your home county, it likely won't be taxable in your home county (Please check /confirm taxation in your home county. US and Eritrea are the only countries that tax income even when income is from foreign sources).
The other option of not contributing to 401k means that they would loose marginal tax rate * 401k contribution. They keep (1- marginal tax rate)* employee contribution.
They can calculate whatever is more profitable but to me it seems like the first one should be more profitable since most companies match at least 50% of 401k contributions upto to some limit.
They would also need to consider how IRA/Roth IRA/401k is taxed in their homes county and if the US and Home country have a tax treaty that might affect this.
For example, India has employee provident fund (epf) that is kinda like 401k and they also have a public provident fund (ppf ) which isn't tied to an employer. My understanding is that the India US tax treaty gives special treatment to epf but not to ppf - so epf proceeds are taxed only in India where it's tax free but not in USA whereas ppf is taxed in USA as well.
It also acts as a forced savings of some kind (mileage may vary on this one)