Pretax contributions make saving a little less painful.
Investments in the account build unimpeded by Uncle Sam… Once the money is in your 401(k), the force field that protects it from taxation remains in place. As long as the money remains in the account, you pay no taxes on any investment growth. Not on interest. Not on dividends. Not on any investment gains.
Distributions are subject to income taxes and may be subject to additional penalties if under 59 1/2.