Scenario is for L/H visa holder who is earning salary in USD. The person also has employee sponsored 401k plan. The visa expires in 5 years and person would like to return at that time to India permanently. Give this information, is it better to have 401k pre-tax which would mean the person pays less taxes in US, and when withdrawn after retirement assuming the tax bracket will be lower so, the withdrawl would also attract less tax penalty.

On the other hand is the option to use Roth (Post-tax withdrawl), which would mean more tax deduction but since the amount is post taxed nothing will needed to be paid during withdrawl.

What is a better scenario to pursue?

  • I'm not sure the question "what's better for me" is a good fit for this site. How can we decide for you? It's your money. You covered the pros and cons well, the decision itself - should be yours. – littleadv Jul 24 '14 at 5:29
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    Well i am looking for insights into the thinking process one should have to plan such a thing, are these the only pros and cons? – Anirudh Goel Jul 24 '14 at 7:38
  • check the company documents regarding the vesting schedule. If you don't stay long enough with the company they won't let you keep all the matching funds. – mhoran_psprep Jul 24 '14 at 20:35

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