Our company (US-based) is considering hiring a foreign citizen (UK) to work for us in the UK. I believe that they CAN contribute to a 401k, but should they? Do they receive the same benefits from the 401k? What will be the tax implications if/when they choose to withdraw their funds?


2 Answers 2


I'm not sure they can contribute to 401k in the US, but even if they could - what for? The person is in the UK and paying UK taxes, from UK perspective 401k is probably just another investment account, and is definitely not a tax deferred account.

So whatever money put there - from UK perspective it is regular income and will be taxed. In the US however, he'll be paying tax and penalties on withdrawals, and then wasting his time trying to get those refunded. What for?


I think they would be better off with a UK (defined contribution) pension as uk pensions have a lot better tax advantages - there is I believe no equivalent of salary sacrifice for pensions in the USA.

With Sacrifice you can effectively get pension contributions and keep the effective take home salary.

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