Darn you're right :) To defend myself (feebly) I can say that you can max out the after-tax 401(k) to the $49k a year limit, then fund a traditional IRA with $

Darn you're right :) To defend myself (feebly) I can say that you can max out the after-tax 401(k) to the $49k a year limit, then fund a traditional IRA with $5k per year, then roll it over to Roth IRA after quitting your job (or even right away, if your employer's 401(k) plan supports it). That way $162k out of $250k will be tax-sheltered. (Of course, you can't take the money in Roth IRA to Vegas, but as I said with carefully tuned investments you can have the same risk-reward line-up). So you will only own taxes on $264k so the taxes will be in the neighborhood of $100k. So I guess you have to save a bit more than $250k or accept a bit worse odds. One problem with money in Roth IRA, of course, is that you cannot take the earnings out without paying the tax and penalty, until you're 65. But if you plan to use your $1M to live modestly off of it (as opposed to buying a tropical island), then you can get around this by starting a SEPP program.