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Is 401k as good as it sounds given the way it is taxed?
This is an excellent topic as it impacts so many in so many different ways. Here are some thoughts on how the accounts are used which is almost as important as the as calculating the income or tax. The Roth is the best bang for the buck, once you have taken full advantage of employer matched 401K.  Yes, you pay taxes upfront.  All income earned isn't taxed (under current tax rules).  This money can be passed on to family and can continue forever.  Contributions can be funded past age 70.5.  Once account is active for over 5 years, contributions can be withdrawn and used (ie: house down payment, college, medical bills), without any penalties.  All income earned must be left in the account to avoid penalties.  For younger workers, without an employer match this is idea given the income tax savings over the longer term and they are most likely in the lowest tax bracket. The 401k is great for retirement, which is made better if employer matches contributions.  This is like getting paid for retirement saving.  These funds are "locked" up until age 59.5, with exceptions.  All contributed funds and all earnings are "untaxed" until withdrawn. The idea here is that at the time contributions are added, you are at a higher tax rate then when you expect to withdrawn funds. Trade Accounts, investments, as stated before are the used of taxed dollars.  The biggest advantage of these are the liquidity.