Is it worth bypassing a 401k in favor of a normal taxable investing account if you can contribute while in the 15% tax bracket and plan to retire in that bracket as well?
After crunching some numbers, it really doesn't matter if you pay the taxes now or later with a 401k unless you are going into a lower bracket.
My assumptions (or things to do before attempting this)
- Contributed to a 401k to bring down taxable income to 15% if not there already
- Have already maxed out a Roth
- Highly likely to retire into this bracket (which seems very reasonable without a mortgage)
Another possible quirk with this is that it also depends on capital gains being 0% when withdrawing in the 15% bracket. This is what I believe the law currently is, please correct me if I am wrong.
If I am looking at this properly it looks like a very good opportunity to have easier access to your money as well as cheaper investing options.
Are there any flaws in how I am looking at this?