401(k) vs Taxable Brokerage Investing
**401(k)** offers tax-deferred or Roth growth, often with employer match—dollars locked until retirement with penalties on early withdrawal. **Taxable brokerage** is flexible but dividends and gains taxed annually.
Step by step
1. Capture full match
401(k) to match first—instant return.
2. Compare marginal tax bracket
Pre-tax 401(k) vs Roth vs taxable after-tax investing.
3. Liquidity timeline
Goals before 59½ may favor taxable or Roth contributions.
401(k) vs taxable
Max match in 401(k); taxable for medium-term goals and tax diversification.
- 401(k): Tax shelter; match; limited fund menu.
- Taxable: Flexible; annual tax drag; no RMD.
Use our calculators
Common mistakes
- Skipping match to pay taxable investments
- Early 401(k) loans without plan
FAQ
What about IRA?
Often next after match—see contribution limits vs 401(k).