Your 401k and traditional ira contributions decrease your taxable income for that tax year, thereby reducing your overall taxes. So why would you not want to contribute as much as possible.

 

Matching:

Matching is free money. If your employer matches your contributions, by making your 401k maximum contribution you increase the employer match. An increased employer match is an increase in free money to you. So why would you not want additional free money.

Like your 401k contributions, traditional ira contributions also grow tax-deferred. Both contributions can be tax deductible. Your withdrawals from either of those accounts will be taxed. But Roth ira contributions do not grow tax-deferred and they are not tax deductible. Your withdrawals from a Roth ira are not taxed.