1. Liquidity & Flexibility

401(k) funds are locked up until age 59½ (barring exceptions like hardship withdrawals, loans, or penalties).

Taxable brokerage accounts or other vehicles give you instant access to your money for opportunities (business, real estate, unexpected expenses).

Greater flexibility allows you to adjust investment strategies over time without restrictions on timing or withdrawals.

2. Tax Diversification

401(k) contributions defer taxes, but all withdrawals are taxed as ordinary income—potentially at higher rates in retirement.

Non-qualified accounts (regular brokerage) get capital gains treatment (often 0%, 15%, or 20%) instead of income tax rates (which may be 22–37%).

Building both pre-tax and after-tax investment pools gives you more control over your tax bill in retirement.

3. Investment Options & Costs

401(k) plans often have limited menus of mutual funds with potentially high expense ratios.

A taxable brokerage account gives access to the full universe of ETFs, stocks, bonds, REITs, etc., often with much lower costs.

Better options = potentially higher after-fee returns over decades.

4. RMDs & Tax Burden in Retirement

Traditional 401(k)s require Required Minimum Distributions (RMDs) starting at age 73.

This can force large taxable withdrawals you may not need, pushing you into higher brackets.

Taxable accounts have no forced distributions—you control what you sell and when.

5. Estate Planning & Step-Up in Basis

401(k)/IRA assets passed to heirs are fully taxable as ordinary income when withdrawn.

Taxable brokerage assets generally get a step-up in basis at death, erasing capital gains and making them more inheritance-friendly.

6. Capital Loss Harvesting

In taxable accounts, you can harvest capital losses to offset gains or up to $3,000 of ordinary income annually.

This is not possible inside a 401(k).

7. Changing Tax Landscape

Today’s tax brackets are historically low. If rates rise, being “all-in” on deferred taxes via 401(k) could be risky.

Having outside investments diversifies against future tax law risk.

(http://www.autoadmit.com/thread.php?thread_id=5772770&forum_id=2Reputation#49257421)

For the average random person, they should probably 401k max.

But if your 401k is just going to be something like 10% of your assets at retirement (even assuming you max it), you're fairly likley to be in the category of people where you may be better off having the liquidity now.

(http://www.autoadmit.com/thread.php?thread_id=5772770&forum_id=2Reputation#49257461)

For example, real estate, private credit funds, PE/VC funds, etc.

(http://www.autoadmit.com/thread.php?thread_id=5772770&forum_id=2Reputation#49258071)

But deferred taxation is a huge draw as is lack of capital gains tax.

I think advisors tend to overlook the list above to a great detriment of investors but maybe the ultimate purpose is to get people to save something

(http://www.autoadmit.com/thread.php?thread_id=5772770&forum_id=2Reputation#49257647)

The total 401k limit for 2025 is 70K, which includes a max employee contribution of 23.5. So your employer can match up to 46.5K.

I get a 6% match with no cap. It's 180.

(http://www.autoadmit.com/thread.php?thread_id=5772770&forum_id=2Reputation#49258050)

(http://www.autoadmit.com/thread.php?thread_id=5772770&forum_id=2Reputation#49257464)