The order, and why
- Emergency fund & high-interest debt. A cash cushion and paying off 20%+ APR debt typically come before investing beyond the match.
- Employer match. Contribute enough to capture your full employer match before adding unmatched dollars. If you’re filing jointly, each partner captures their match first.
- HSA if enrolled in an HSA-eligible high-deductible plan.
- Roth IRA — direct if under the income limit, partial in the phase-out, or "backdoor" above it. Filing jointly? Each of you can contribute.
- Fill the 401(k)/403(b) employee limit, Roth or pre-tax depending on brackets now vs later.
- 457(b), which has a separate limit, if available.
- Mega backdoor Roth (after-tax contributions + in-plan conversion) if the plan allows it.
- Taxable brokerage for everything else.
FAQ
Why is the employer match first?
A 50% or 100% match is an instant, guaranteed return on the dollars contributed — far more than markets typically deliver in a year. Skipping it leaves part of compensation unclaimed.
Why is the HSA called triple tax-advantaged?
Contributions are deductible (or pre-tax via payroll, which also avoids FICA), growth is untaxed, and withdrawals for qualified medical expenses are tax-free. After 65 it can be used for anything, taxed like a traditional IRA. Family coverage has one shared limit per couple.
Roth or pre-tax?
Roth means paying tax now at today's bracket; pre-tax means paying later at the retirement bracket. If the later bracket is expected to be lower, pre-tax tends to win; if higher, Roth. When it's a toss-up, many households split for tax diversification. State taxes matter too (e.g., moving from a high-tax to a no-tax state favors pre-tax).
What is a backdoor Roth, and what is the pro-rata rule?
Above the Roth IRA income limit, a non-deductible traditional IRA contribution can be converted to Roth. But the IRS treats all of a person's pre-tax traditional, SEP and SIMPLE IRA balances as one pool: if 75% of the pool is pre-tax, 75% of the conversion is taxable. Rolling pre-tax IRA money into an employer plan (if it accepts roll-ins) before year-end is a common way to avoid this. Each spouse's IRAs are tested separately. Reported on Form 8606.
What is a mega backdoor Roth?
Some 401(k) plans allow after-tax (non-Roth) contributions above the $24,500 deferral limit, up to the $72,000 total limit for 2026, plus an in-plan Roth conversion or in-service withdrawal. That moves tens of thousands more per year into Roth. Both features must be offered by the plan.