Hi ;

I am from India and have been residing in Us for a year now. I was not so sure about my investments last year and people suggested not to invest in 401 K if I am not planning to stay in US permanently. I didn't and found that for 2006 my taxes were really high and decided to invest in an IRA traditional account for 2006.

Now I have opened a 401 K for 2007 am worried already as to the amount going in . I have invested 10% of my gross into my 401 K and of the first 6 % my company pays 50 % of that . So it's a pretty strong investment plan.

My worry is If I do to go back to india in the next 4 to 5 years I

1. how can I estimate the growth on my 401 K.
2. Find out the Tax I need to pay on it.
3. 10 % penalty fee is it mandatory.
4. Any other liabilities.
5. Is this all worth.
6. Any other investment options available.

Should I consider investing a smaller amount so that I do not loose out high on taxes later rather than losing it out now at least when I get to have the money now.

Thanks for the assistance.

A retirement plan is definitely worth it. I personally, think you should have went the ROTH route on both plans. I would actually convert now, unless of course you're over the AGI limits. I don't think the ROTH 401k has AGI limits though, so you might be able to do that. Depending on how your fund is performing I would also go with an administrator that offers "self-directed" plans, by that I mean the ones with pretty much no restrictions except for prohibited transactions. I wouldn't worry about leaving to India, you can always get your money out, whenever you want without penalty.

I know there are going to be people who read this who think that's hog-wash, but it is very true, you just have to know what you're doing and get very creative with your methods.

There ARE AGI limits on the Roth IRAs. However, they probably do not apply to the new Roth 401Ks.

I agree that you should keep the retirement plan. When you return to India, you can roll the plans over into a rollover IRA, then manage the IRA from India via telephone and email. The Internet makes it all possible.