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Updated over 4 years ago on . Most recent reply
![Steve Chan's profile image](https://bpimg.biggerpockets.com/no_overlay/uploads/social_user/user_avatar/1498937/1621512937-avatar-stevec305.jpg?twic=v1/output=image/crop=199x199@0x0/cover=128x128&v=2)
Why keep money in your 401K?
If your 401k provides a low rate of return and you know you can invest your money at a higher rate of return than the fees associated with withdrawing your money plus the opportunity cost of leaving your money in the 401k, why would you keep your money in a 401k?
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![Taylor L.'s profile image](https://bpimg.biggerpockets.com/no_overlay/uploads/social_user/user_avatar/569676/1715197864-avatar-taylorlrei.jpg?twic=v1/output=image/crop=178x178@5x0/cover=128x128&v=2)
"401(k) provides a slow rate of return" has very little to do with the 401(k) and far more to do with what you invest it in. We can invest 401(k)s and IRAs in basically anything, including real estate (with caveats), so there's less need to take that tax hit and pull the funds out.
The tax savings when contributing to a 401(k) are enormous. It's very difficult to make up for that big tax hit if you're in a high tax bracket. You're essentially putting yourself behind right out of the gate. For high income earners, deferring the tax bill gives us far more capital to invest, which numerically ends up in a much greater final result. Then when we retire and are in a lower tax bracket, we can take distributions.