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Ask Lane Your Own Question
Category: Tax
Satisfied Customers: 9743
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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How does 401k/retirement savings plan work for non-American

Customer Question

How does 401k/retirement savings plan work for non-American full time workers in America ? Should I just opt out of it ?
Submitted: 1 month ago.
Category: Tax
Expert:  Lane replied 1 month ago.

Hi. my name's Lane. I can help you here.


This is really a call you should make ... However, if you use the plan as intended ... as a retirement plan ... It work's for oyu JUST as it works for any othre tax resident (US citizen, green-card holder or one passing the substantial presence test).


It is a dollar for dollar deduction from taxable income (so, in essence, at the 25% tax bracket, it feels more like that $1000, for example, is only a $750 contribution)


And it should be noted that this is the only tax deduction where you get the deduction WITHOUGHT actually spending, or giving away, in the case of charitable deductions, the money.


Then the dollars grow without being taxed either.


The when you retire, even if you are not in the US at the time, the dollars will finally be taxed ... but likely at a time when you have lower tax bracket because of no earnings

Expert:  Lane replied 1 month ago.

Please let me know if you have any questions at all, before rating me


If this HAS helped, and you DON’T have other questions … I'd appreciate a positive rating (using the stars or faces on your screen, and then clicking “submit") ... Otherwise I receive no crediting for the work here.


Thank you!


I hold a law degree, with concentration in Tax Law, Estate law & Corporate law, an MBA, with specialization in financial accounting & tax, a BBA, and CFP & CRPS designations, as well - I’ve been providing financial, Social Security/Medicare, estate, corporate, non-profit, and tax advice, since 1986.

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