I have maxed out my 401K for the past 6 years or so, always hearing how it is advantaged. I have done researched and convinced myself it was true, but I was always under the impression that earnings in the plan were never taxed, which I now believe to not be true. Aside from the employer match, which is an obvious direct benefit, what is the 401K really getting me? "Tax Deferred" doesn't seem to matter, because I am paying the tax man now or later, so I don't perceive that as a great benefit as I don't need the extra money now. Is this benefit that I could use extra money now if I really needed to?
Secondly, if there were no employer match, why wouldn't I just go with a Traditional IRA? Both are tax deferred, and the biggest difference that I understand is the employer match obviously doesn't exist in the non employer plan.
Thanks for clearing this up for me!