Exactly - it's a pseudo-savings account. For certain things like home purchases, I believe you can withdraw without tax penalty too. This might end up being a good idea if the rate of return on real estate is greater than what you're getting in the 401k funds. For me right now this is not the case - the real estate market is very volitile and on the brink of collapse and a couple of my 401k funds netted over 30% return last year. Feels nice to finally be doing SOMETHING right!
Can you set up contributions to a IRA or Roth IRA in the same way that you have withholding contributions made to a 401k? Sorry, I'm not a finance geek (still trying to learn a lot of this stuff).