“You’re right DaCounselor and tax implications are worth considering; however, when you start having enough of a nest egg management fees and market fluctuations can wipe out any tax benefit.”
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There certainly are a number of variables but very generally speaking in the world of 401K’s the management fee premium you may pay will be easily trumped by the tax savings. For instance and using my earlier hypothetical, if you are deferring taxes on $10.5K/year (= $3K/year) and your management premium is 1% over an IRA, it would take about 30 years for your management premium to equal the initial tax savings, and that is assuming a 0% return on your investment, which is highly unlikely – you’re going to make more over the long haul – probably considerably more than 0%. Hard to see how a management fee premium is going to outweigh positive tax implications. As for the effect of market fluctuations – who knows what they will be – how can you figure that out?

Bottom line is there are more uncertainties than certainties and you can debate the uncertainties til the cows come home and never get anywhere. As for the certainties, again using my example above it is an absolute certainty that an extra $3K is going to get invested instead of going to Uncle Sam if you go with the 401K. I look at that as an instantaneous 50% return (instead of getting around $7K after taxes, I get $10.5K to invest). As Emeril says – BAM! – 50%. It’s also an absolute certainty that you will have an opportunity to have that extra money work for you in the market.

I absolutely respect everyone’s own choice to do what they will with their money but to me maxing out a 401K is a no-brainer.