And really, even keeping investments in a taxable brokerage account is fine. Until a married couple makes over $613k, their tax rate for long-term capital gains is 15%. And over that it’s only 20%. The US loves to tax labor and consumer spending, but not investment income. It’s baked into the tax code. If I invest $50k and over 25 years it turns into $350k, I honestly don’t mind paying 15% on those $300k in gains. And if your household income is under $99k, you pay no long-term capital gains tax. This effectively means that those living off of large amounts of taxable mutual funds can cash out up to $99k in gains per year without owing taxes on those gains.

And there are some oddball circumstances where taxable accounts are even better than tax-advantaged accounts. I once worked at a job where the 401k had terrible options. They simply had no low-cost index funds. They all had terrible expense ratios. I did the math, and the compounding effect of those ratios, eating away at my retirement savings, reducing its compound growth year-by-year. I ran some calculations, comparing investing in the expensive 401k plan or low-cost index funds in a taxable brokerage account. And the taxable brokerage account beat it out over the length of a career. Even when I assumed I would have to pay 15% on all gains made, a cheap taxable investment account can beat out an expensive 401k plan. Certainly not the ideal situation, but people rarely have the luxury of rejecting an employment offer because of the options in a company’s 401k plan.