maxing a 401k
Some nits at work are trying to peer pressure me into funding my 401k to the max (25%). They act like its crazy to do otherwise. I currently only fund to the full company match.
My logic is that I am currently in my 20s in the 25% tax bracket, I assume I will at least remain in this tax bracket when I retire.
It is my understanding that 401k withdrawals are taxed as normal income, whereas if i just take my own money and throw it in an index fund it would be taxed as capital gains ( cap gains tax <<< normal income tax )
So it seems like I would be losing money to taxes long term by maxing a 401k. Plus it seems like I would unnessecarily be putting my money in a lockbox for 40 years.
Am i thinking about this the right way?
Is there any real benefit to fully funding a 401k?
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