dbr84

Do folks on 1-2 year visas generally invest in their companies 401K plan?

Say I left the country after 2 years and never came back, would I lose the money I've put into it?


I guess I'm wondering if I should get in the 401k plan or just save money/send it to my UK pension accounts.



Thanks for any advice!

Rete

From a layperson, not an HR person, you don't lose anything you put into a 401K. I can think of two good reasons for it:

1. The company might contribute a share to it so it is found money for you. My profit sharing was put into my 401K plan and it was a sizable amount each year.

2. It is tax free money. It is deducted from your salary before taxes are calculated so you don't pay taxes on it until you retire and have a lower income. Unless it is a ROTH plan.

dbr84

Financially it looks good, I'm just thinking logistically - how would I access the money down the line (at retirement) if I leave the US.

Owen778

You don't lose money, no. You can access anything you add to a 401k from outside the US, usually online. I suspect it has preferential tax treatment in the UK through the tax treaty, but I don't know for sure as it's not important to me.

That said, 401ks often include a significant company match of some or all of your contributions. Often that vests on a 3-year scale - sometimes a sliding scale and sometimes 100% all at once. If you don't stay long enough for that to vest, you will not receive that money.

Rete

You would access it through your investment broker. When you leave the company you have the option of leaving it where it is invested by the company under your name or rolling it over to your own brokerage house, i.e. fidelity, etc. At age 59-1/2 you can access the money without incurring the 10 percent penalty for early withdrawal.

Rete

He would still receive his own investment, right? But not the company contribution, if I am reading your reply correctly.

dbr84

Cool - thanks, very helpful

Pulaski

I can't think of any circumstances when having additional retirement savings is a bad thing, so I would certainly recommend signing up for the 401k, especially if it has "matching funds" (contributions paid by your employer on top of your salary).

A 401k is America's answer to a private pension account. When you leave your empliyer in the US you can transfer the balance to an independent manager. So ahead of your return to the UK you should research possible managers because you will have only a small window of opportunity to move the funds out if your employer's 401k scheme because managers won't open a 401k transfer account if you are resident outside the US.

Owen778

Correct.

Pulaski

If the OP is on an L-1 visa he should ask if they can waive the vesting period if he leaves the US corporation but remains with the same overall group.

I think my employer's matching contributions vested after 12 months.

Owen778

Yes, good idea.

And yes, vesting periods vary in length. In fact, it's likely the OP's UK experience will be counted towards the vesting period meaning he or she is vested immediately. Mine was, in exactly the same situation.