I am on H-1b visa in the U.S. I will stay between 2 and 5 years here. My employer is (almost) matching my 401k contribution.
I am wondering if it makes sense for me to participate in the 401k. I have no intention of using it at retirement age, due to my situation. I have done the rough calculation and I think it does, but I might be missing something.
So I contribute $191.67 twice a month. The employer contributes $143.80 twice a month. I become vested after 2 years of employment.
2 years, no 401k: 24 * 191.67 * 2 = 9200 - 2024 = $7,176 after tax (I've put roughly 22% for tax) 2 years, with 401k: 24 * 191.67 * 2 = $9200 own contributions 24 * 143.80 * 2 = $6902 employer 9200 + 6902 = 16102 - 5313 = $10,789 after tax and penalty (22% tax, 10% penalty)
So at minimum, I am ahead with $3,613 as soon as I become vested, even with the 10% penalty. I am aware that if I leave the employer even a month before the 2 years vesting period, I'd lose money. e.g.:
2 years, 401k, quit a month before vesting: 23 * 191.67 * 2 = 8816.82 own 8816 - 2909 = $5,907 after tax and penalty. i.e. lose $1,269
But if I work for 5 years, I'd be ahead with $9,032 thanks to the employer's contribution.
I am not even counting the market fluctuation for my investments. Let's just assume I don't lose money on the market.
Any holes in my 'airtight' financial plan? Can I 'abuse' the 401k as a short-term investment strategy?