I am on H1B visa for last two years and most likely will leave US after I finish 4 more years. I would take my funds back from 401(K) when I leave US. I know that I would have to pay 10% penalty. Also, I know that the company which handles my 401(k) funds will deduct 20% for tax retention. And then IRS will count accual tax based on the amount I would withdraw.

I am paying 3% of my salary to 401(K) and my employer is matching the same amount.

My questions are:
1) How do I know the exact tax amount I would have to pay to IRS when I took all money out from 401(K)?
2) Is it advisable for ppl like me (who would leave US before they get retire) to stop putting money in 401 (K) ?
3) If I stop putting money in 401(K), I would pay more taxes now and my employer will not match any money. But if I continue putting money, and after 6 years, when I take money out, what if the tax I would pay would be much higher than what I could pay right now? if that's the case, I can stop putting money in 401(K) and enjoy that extra cash from my pay-check right now.

I hope I didn't make the question more complex than it should be.
Thanks.

AtlantaTaxExpert

I need to know which country you are from. That affects my answer.

b9modi

ATE,
I am thinking along the same lines - more so, because my employer matches only 50% and the 20% tax sounds a little too high. I was thinking it might be better to put in into some CD and avail something like 4% interest.

Also I intend to go back to India after about 10 years of service and realized that there is some provision to get back atleast some SS after one accumulates 40 credits and considered to be eligible to receive benefits.

AtlantaTaxExpert

B9Modi:

If you have qualified for 10 years under Social Security, then, yes, yu are qualified for benefits. You will get something, either direct from the U.S. or through your home country.

rikin t

I am from India, if this helps.

AtlantaTaxExpert

Rikin:

Is there any reason why you cannot just leave the money in the 401K (or roll the money over into a traditional IRA), then pull it out when you hit 59.5 years of age from India??

Given the state of modern communications, I see no reason NOT to leave it where it is.