I have recently started a job. My company offers 401(K). My plan is to go back to India after 7-8 years or so. Is it justified for me to sign up for 401(K), given the fact that early withdrawal results penalties? Also, please let me know the extent of penalty given my situation.

>Moved to a more appropriate board<

Here's a nice discussion on the topic of non-US citizens investing in 401(k) plans:

Retire To India: Early 401(k) withdrawals for non-citizens (http://www.retire2india.com/2007/05/early-401k-withdrawals-for-non-citizens.html)

Between penalties for early withdrawal and the taxes imposed by both the US and India, you may find that the cost and aggravation just aren't worth it, especially if you won't be considered a permamnet US resident (i.e. still have your green card).