It passed through my mind before that it might be better for a profitable trader to trade in a tax deferred account and offset the 10% withdrawal penalty by growing his account faster. Of course how much you withdraw is going to be a big factor, but it seems very worthwhile to have a separate retirement account as a tax deferred growth fund, with the intention of a penalized withdrawal years down the road. (fine if you aggressively grow your account and the tax deference is worth it) Assumptions: $15,500 starting balance in a self directed 401(k) with no extra contributions. $10k earnings first year, $15k next, 50% ROI thereafter No state taxes (higher taxes will increase the attractiveness of the tax deferral) A 20% account withdrawal in the 401(k) only is shown for each year BUT NOT CARRIED FORWARD. Each year starts with the assumption of 100% of funds reinvested up to that point. The Taxable account chart has no withdrawal projections. I used a regular 401(k) because a Roth seems too easy to "cheat" with (Possible to pump up a small account taxed up front and then withdraw funds whenever for just 10%? Highly doubt that) There must be some harsher rules for early withdrawals. I couldn't find any but saw that the traditional IRA gets a 25% penalty instead of 10%. Attached is a picture of the spreadsheet and the file itself. http://rapidshare.com/files/131242413/Tax_normal_versus_defer_penalty_at_50_.xlsx.html Someone tell me if I missed something, thanks.