401k is taxed at the time of withdrawal, but that's usually at a lower tax bracket. 500k in income 1 year is ~$162k in income tax. 500k in income split across

401k is taxed at the time of withdrawal, but that's usually at a lower tax bracket. 500k in income 1 year is ~$162k in income tax. 500k in income split across 2 years is $68.5k each year totalling $137k. It's not massive but it's still a decent chunk of taxes people can avoid.