401K: What It Is and How It Works for Indian Professionals Abroad

When you hear 401K, a tax-advantaged retirement savings plan offered by US employers. Also known as a 401(k) plan, it’s one of the most common ways people in the United States save for retirement—especially those working in tech, engineering, and healthcare. If you’re an Indian professional working in the US, whether on an H-1B visa or green card, your employer might automatically enroll you in one. But do you know how it actually works? And more importantly, should you be using it?

The 401K, a tax-deferred retirement account tied to employment in the US lets you put part of your salary in before taxes. That means your taxable income drops right away. Many employers also match a percentage of your contribution—like free money. For example, if your company matches 50% up to 6% of your salary, and you earn $80,000, putting in $4,800 gets you an extra $2,400 from your boss. That’s a 50% return before the market even moves.

But here’s the catch: if you leave the US, what happens to your 401K? You can’t just withdraw it without penalties before 59½. You can roll it into an IRA, leave it with your old employer, or cash out (and pay big taxes). Most Indians working abroad don’t realize this until it’s too late. And while IRA, an individual retirement account that can hold 401K rollovers is an option, it’s not always the best fit if you plan to return to India. Then there’s the question of taxes—India and the US have a tax treaty, but filing correctly is tricky. Many end up paying twice or missing out on credits.

What’s clear from the posts here is that people care about real, practical financial paths—not theory. Whether it’s understanding how Google certificates can open doors to higher-paying jobs, or how IITians in Silicon Valley build wealth after JEE, the pattern is the same: success comes from knowing the system, not just working hard. A 401K isn’t magic. It’s a tool. And like any tool, it’s only useful if you know how to use it.

Below, you’ll find real guides on what matters most: how to maximize your retirement savings while working abroad, what to do when you switch jobs, how taxes affect your 401K, and whether it’s smarter to save in the US or send money home. No fluff. No jargon. Just what works for Indian professionals navigating life and money in America.