401K: What It Is, How It Works, and Why It Matters for Indian Professionals Abroad
When you hear 401K, a tax-advantaged retirement savings plan offered by employers in the United States. Also known as a defined contribution plan, it's one of the most powerful tools for building long-term wealth if you're working in the US. It’s not just a paycheck deduction—it’s free money from your employer, tax breaks, and compound growth all rolled into one. And for Indian professionals on H-1B visas or green cards, skipping it means leaving thousands on the table every year.
A 401K, a tax-advantaged retirement savings plan offered by employers in the United States. Also known as a defined contribution plan, it's one of the most powerful tools for building long-term wealth if you're working in the US. works like this: you choose how much of your salary to put in—up to $23,000 in 2025—and your employer might match part of it, often 50 cents for every dollar you contribute. That’s instant 50% return on your money. The money grows tax-free until you withdraw it after 59½. If you leave your job, you can roll it over into an IRA or keep it where it is. No one forces you to touch it, and if you don’t use it, you lose nothing except the chance to grow your future self.
Many Indian professionals don’t realize how much they’re missing. They think, "I’ll send money home," or "I’ll invest in mutual funds in India," but those don’t come with employer matches or US tax benefits. A 401K, a tax-advantaged retirement savings plan offered by employers in the United States. Also known as a defined contribution plan, it's one of the most powerful tools for building long-term wealth if you're working in the US. is the only retirement plan that combines all three: your contribution, your employer’s contribution, and tax deferral. Even if you plan to return to India, keeping your 401K active or rolling it into an IRA gives you a solid financial foundation abroad.
Some worry about fees or bad investment options. That’s valid—but the solution isn’t to skip it. It’s to pick the lowest-cost index fund available, like an S&P 500 fund, and stick with it. You don’t need to be a finance expert. Just contribute enough to get the full match, then increase it by 1% every year. That’s it. The rest takes care of itself over time.
And here’s the truth: if you’re working in the US, your 401K isn’t optional—it’s your best shot at financial independence. The posts below show real stories from Indian professionals who started late, didn’t understand it, or thought they didn’t need it. They learned the hard way. You don’t have to.
- By Nolan Blackburn
- /
- 18 Jan 2025
Comparing Government Jobs and 401K: What You Need to Know
Navigating the decision between government jobs and private sector roles often leads to the critical question of how their retirement benefits match up. This article delves into the nuances of government job retirement plans versus the private sector's 401K offerings. Unravel the differences, advantages, and considerations worth weighing before making a career choice. Learn important facts about pension stability in public service compared to the flexibility of 401K plans. Gain insights that can influence your job decisions significantly.