The comment parent to you said it poorly. The 401k is the container, you don’t move stuff out of it you change the investments inside of it.
replyThe tax advantages of being forced to pay ordinary income rates on your distributions as compared to long term capital gains (which are low, capped, can be exercised before a tax hike, and avoided entirely if you just need collateral)?
reply401k lets you rebalance a portfolio with zero tax implications.
reply401k reduces your taxable income when depositing money.
The downsides are a 10% penalty for early withdrawal which makes them surprisingly bad for young people. They tend to start in lower tax brackets, have fewer reserves when unemployed, and face fewer risks from an unbalanced portfolio.
Pay down debt then Roth IRA when young 401k after 40 is often better than defaulting to a 401k, but saving anything tends to be more important than such optimizations.