Originally Posted by
Conzar
You take it wrong then. In the USA, there are many ways to minimize the amount of income tax both at state and federal levels. 401(k)'s are a very deceiptive device because it seems like you are saving money on not being taxed. The problem is you will eventually be taxed and you have to bet on 1) your income tax rate being less then it is currently and 2) the USA tax law remains the same.
If you believe all those financial advisers out there that you will be a millionaire when you retire, then I suspect tax rates for millionaire's to be much greater then your average working class person. That's of course if your 401(k) hasn't killed any profit you could make by the numerous hidden fees that 401(k) managers charge (have you ever asked for a detailed fee structure from your 401(k) manager?).
My defacto partner and I did a detailed analysis on 401(k)'s a few years back after reading from other people who claimed 401(k)'s were a bad deal. We made a financial model that allowed us to compare 401(k)'s with CD's. At the conclusion of it all, we had stopped contributing to the schemes we already had foolishly bought into and waited until we could minimize the tax we had to payout by taking it all out as an early withdraw.
If you just go by what the 401(k) management companies provide you, then you could easily be fooled into thinking you are making more money then you actually are (they love sending you incomplete graphs and information about how your money is growing).
Anyways, then there is this huge risk that the stock market will crash yet again which could wipe out your retirement. Financial Advisers/Bankers will tell you that its very rare for the stock market to crash and it hasn't happened for 30 years before this one. But all it takes is one time for your wealth to be wiped out. If you are close to retirement age like many Americans are right now, then you have no chance at making that money back.
It seems that the op already made his mind up about his "tax shelters". I wonder why he even posted the question in the first place???