This is correct, but in addition, you pay taxes at your marginal rate on your initial investment (which is only $100k, but is still at your top tax rate). This is all really an argument about optimizing withdrawls.
EDIT: in addition, in the 25% bracket, $100k of taxable account amounts to $125k in a 401k, so when you withdraw (assuming the same exact investments), the 401k is at $725k and the taxable account is at $600k
This post confused me a bit because of the way it was worded, but I mostly agree with it after reading it a few times. Since you don't pay taxes on the initial principal when you put it in a 401k, the investment is larger than it would be in a taxable brokerage account. In the 25% bracket, you have to pay $25K in taxes in order to get it in a taxable brokerage, reducing the actual investment to $75K (or leave it at $100K and increase the 401k contributions to $125K as thd7t did. So:
401K = $125K + $625K = $750K
Taxable = $100K + $500K = $600K
By the time you retire, your investment balance is 25% higher in the 401K than it would be in the taxable account. Now it's time to withdraw and/or spend the funds. If done properly, and under the right personal circumstances, you can achieve a tax of < 15% pulling out of the 401K and 0% pulling out of the Taxable account.
Both investments will continue to grow. I'm going to ignore calculating actual amounts on that for simplicity since this is already getting much more complicated than I intended to get in this thread. Let's just say you retire at 45, and you have 25 years to move the funds. I'm going to use 20 years to allow for continued growth in the accounts during your drawdown.
401K = $750K / 20 = $37,500 * 15% = 5,625 tax
$37,500 - 5,625 = 31,875 * 20 years = $637,500 total cash recovered
Taxable = $600K / 20 = $30,000 (This is the total investment, you don't pay tax on the principal, but you don't pay tax on the gains either if you do it right)
$600K * 0% = $600K total cash recovered
So in this example, albeit one simplified by not calculating continued growth or actual marginal rates, and ignoring all potential deductions, exemptions, and other income that would effect your marginal rate, putting the $100K into a taxable account loses by $37,500 to putting the $125K into a 401K .
If I begin drawing down my 401K balance when I'm 45, I'll have a 14 year old, and a 10 year old at home. Married, itemized deductions, etc. With $50K in 401K withdrawals and no other income, that equates to about $20K in taxable income at most, which is just out of the 10% bracket. That means on a $50K draw, my tax would be about $2K, or 4%. If I use 4% in the example, the 401K wins by $120K.
Hopefully that will help you understand the impacts of all this Meadow, or anyone else reading. A traditional 401K/IRA/HSA etc. kicks the ass of a taxable brokerage account if you use it the way an early retiree can. Max that shit out!