@nullous makes perfect sense! so if it is put in a mutual fund, only the interest earned in later years will be subject to tax! i should recommend this approach at work! i'm sure there is a loophole somewhere in our tax system.
@grz Basically a 401(k) works like this: they take the money out of your paycheck before income tax deductions are calculated, that money is then put into a mutual fund. When you retire you then start getting paid from that money and pay the income taxes on it. Since your income is lower after retirement you pay less taxes on it.