There are some good reasons to have the water in the tank hotter than 120, but if you do, you should have a tempering valve to drop the output to the fixtures.
If you have a closed system, after draining hot water from the tank (say a long shower or filling the tub or washing machine), when the cold that replaced it gets heated, it expands. Since the pipes won't balloon much, high pressure will leak at the weakest point. This is where an expansion tank is required.
Where I live, an expansion tank AND a tempering valve are required on ALL WH installations, even if it is not a closed system.