zlacker

>>toomuc+(OP)
Read somewhere that they get 12% match on 401k. No pensions, but there’s almost none of that in today’s world.

>>pixela+y3
Pensions seem nice to have, but IMHO, it's generally better for employer and employee when compensation is paid immediately. The accounting is simpler, accountability is easier, and there's no long term entanglements.

>>toast0+F5
It depends on your income level in the US, but in general a 401k is a tax dodge for the employee

>>sidewn+Pb
In an ideal world yes, but the amount of money people lose from the 10% early withdrawal penalty is huge. You don’t want anywhere close to 100% of your long term savings in a 401k.

>>Retric+rc
What does early withdrawal have to do with this? I'm talking about the tax status of contributions

>>sidewn+Ic
Contributions are taxed at withdrawal, cash in your bank account isn’t. If you’re saving 30% when you contribute but paying 40% when you withdraw, that can be worse than paying upfront.

Obviously, long term capital gains should be part of the equation but if you’re young in a lower tax bracket but a lucrative career, 401k can be a terrible financial decision.

>>Retric+ie
that isn't how Roth 401ks work. Also you still aren't explaining what an early withdrawal has to do with this

>>sidewn+Ol
Roth 401(k)’s are actually worse here. Unlike 401k’s it use post tax deposit so there’s zero tax advantage upfront. You also need to both pay taxes and a 10% penalty on early withdrawal of any gains, so it’s a significant risk with minimal upside considering the low rates of capital gains.

There’s nuances around things like divorce, but people overlook just how tax advantaged traditional investments currently are.