401K valuation

should you max out your 401k valuation as part of your personal finance strategy?

• First, consider the match. This is easy to value and is free money. If you have a match of 4%, then your 401k has a base value of $your_salary * $match_rate.
• Then, consider the tax advantages. I contribute $19,500 to max out for the year. 401k money is 'pretax', and is deducted from your salary before taxes are deducted. Therefore its saving you additional money based on how much income tax you save on it.
• Federal taxable income bracket for $80,251 to $171,050 is 22%. Let’s assume that my income would fall in that range regardless of the previous $19.5kSo a 401k saves me $19,500 * 22% = $4,290 per year on taxes. so you could say the 401k is worth $4,290
• Also worth considering, if you want to make a withdraw before age 59.5, you will have to pay a 10% penalty on top of other taxes.
• To avoid these fees, you could look into a 401k loan.
• When you shift jobs, you can roll over you money into a Rollover IRA.