401k Explained For Visa Holders In America!
Most American companies offer 401k to their employees. This is a pre-tax retirement saving plan. You can invest a percentage of your salary, up to an annual limit which is 19,500 for 2021. and the best part is that sometimes employer may also match your contribution. And then your money in the retirement plan is invested in different mutual funds of your choice. That means that the available balance in the account is determined by the contributions made to the plan (by you and your employer) and the performance of the investments. So I see a lot of free money here but the trick is you cannot cash out your money until the age of 59 and ½. I mean you can obviously take it out but there is a 10% early withdrawl penalty that you would have to bear on top of all the taxes.