401(k), HSA, or IRA First? The Order That Saves the Most
With so many tax-advantaged accounts available, deciding where your next dollar should go can feel confusing. The short answer: fund your 401(k) up to the full employer match first. That match is an instant, guaranteed return that no investment strategy can reliably beat, so leaving it unclaimed is leaving free money on the table. Once the match is secured, a Health Savings Account is typically next if you're eligible, thanks to its rare triple tax benefit of deductible contributions, tax-free growth, and tax-free qualified withdrawals.
After maxing out the HSA, an IRA, whether Roth or Traditional depending on your tax situation, is the next stop, followed by directing any remaining funds back into additional 401(k) contributions beyond the match. This calculator takes the amount needed to capture your full match, your HSA and IRA limits, and your total investable funds for the year, then automatically allocates your money across all four steps in that order.
This priority order reflects common financial planning guidance for maximizing tax advantages, not a guarantee for every situation. Contribution limits change annually and eligibility for HSAs and Roth IRAs depends on your specific plan and income, so verify current IRS limits and consult a financial advisor for your personal circumstances.
Frequently Asked Questions
Your employer match is essentially free money, an instant 100% return that no investment can consistently beat, so you should always contribute enough to capture the full match before funding anything else.
A Health Savings Account offers a triple tax advantage: contributions are tax-deductible, growth is tax-free, and withdrawals for qualified medical expenses are tax-free, often the best tax treatment available if you're on a high-deductible health plan.
If you're not enrolled in a high-deductible health plan, skip the HSA step and prioritize maxing your Roth or Traditional IRA next, then return to additional 401(k) contributions with any funds left over.