Mates ,
As a H1B employee in US, I always had second though about whether or not to contribute to 401(k). On one side there is some extra compensation but on other side there is huge penalty if I withdraw early. Given the wait for green card for folks from India and China its psuedo-same-employer-lockdown situation. So considering time value of money and given the inflation rate does it make sense to contribute to 401(k) or IRA ?
What other H1B folks on HN do ?
You should contribute maximum possible to 401(k) plan of your employer. You get two main benefits from your contribution - employer match and tax reduction as contribution are pre-tax.<p>Why would you need to withdraw early? In case you do go back to your original country, either leave the 401(k) alone or rollover to an IRA. There is no issue leaving the money in IRA/401(k) in US until you become eligible for penalty-free withdrawal.<p>BTW, depending on the country and its tax treaty with US, you may be able to move retirement funds penalty free from US to your country (for example (401k to RRSP in Canada). Also, if you paid social security in US, you can get equivalent credit in to your country's similar plan (for example, Canada Pension Plan).
First of all, I'd like to state that I am in the same position as you are, but I think you got some facts wrong.<p>1. Green Card
The green card wait list is actually really only for citizens of China and India. I believe every other country has 0 wait time. I could be wrong with the statement "every", but it definitely is the case for the majority of countries. There is an allotted amount of green cards for each country. As long as this is not surpassed for your country, you should be good.<p>Let's talk about the 401k. It totally depends on how much matching you get from your employer. Does your employer match your contributions 1 to 1 or with a lesser ratio? If it is a lesser ratio, I would do the math. Assuming you are in the State of California, there is a penalty of roughly 50% for early withdrawal of the funds. So you will definitely get at least your own money back, in case you do go back to your original country. But if you do end up making it here for a until after a certain age, it might be worth considering.<p>Hope this kind of helps.