Question

Advantages and disadvantages of 401k

Answer 1

Because you put money from your paycheck into a 401k on a pre-tax basis, making contributions reduces your annual taxable income and the amount of tax you have to pay. ... This is similar to the way taxes work with a Roth IRA; however, a Roth 401k has a major advantage, because there's no income limit.

Answer 2

Advantages:

Your money goes in before taxes.

The company will often match your contribution.

You have many choices to allocate your money.

Disadvantages:

Your money is not available to be used before age 59.5 except under rare circumstances.

The money you put into this plan is not available for rent or car expenses.