...was wondering if it's that much of an advantage overall when I could use that money in a vanguard brokerage account.
It will depend on the specific tax rates and investment fees. For one example,
- 22% tax at contribution, 12% ordinary income tax and 0% LTCG tax at withdrawal
- 7%/yr growth with 2% from dividends and 5% from growth in all accounts
- 15% tax on annual dividends
- $10K available pre-tax
- Investments held 30 years, then withdrawn for spending
Given the above, after 30 years the spendable amount from $10K pre-tax is
- $67K if invested in a traditional account
- $54.6K if invested in a taxable account
In other words, you get ~28% more growth ($57K vs. $44.6k) in traditional vs. taxable.
Of course, change the assumptions and the answer may also change. See the
case study spreadsheet if you would like to try other scenarios.