You have decided to save for retirement. Great. Now, which account? Every US employee has access to some combination of a 401(k), a Roth IRA, a traditional IRA, and maybe an HSA or SEP-IRA. They have different tax treatments, contribution limits, and withdrawal rules. Choosing the wrong order leaves money on the table — sometimes thousands per year.

Here is the priority stack that works for almost everyone, and the reasoning behind each step.

The standard priority order

1. 401(k) up to the employer match

If your employer matches, say, 50% of contributions up to 6% of salary, contributing 6% gives you a 50% instant return on that portion. No other investment — stocks, bonds, real estate — reliably delivers 50% overnight. Always capture the full match first.

On a $70,000 salary with a 3% match, passing on the match costs you $2,100 per year in free money. Over 30 years at 7% returns, that is $210,000 in foregone wealth. There is no scenario where skipping the match is the right call (unless you genuinely cannot afford to eat while contributing, in which case a 1% contribution to get 0.5% match is better than zero).

2. HSA (if you have a high-deductible health plan)

An HSA is the most tax-advantaged account in the US tax code, but only available if you are on an HSA-eligible high-deductible health plan (HDHP). It has a triple tax benefit:

  • Contributions are pre-tax (no federal, state, or FICA tax — FICA is rare for retirement accounts)
  • Growth is tax-free
  • Withdrawals for qualified medical expenses are tax-free (now or decades from now — keep receipts)

After age 65, HSA funds can be withdrawn for any purpose at ordinary income rates (like a traditional IRA). So the HSA is effectively a Roth IRA with bonus upside. 2025 contribution limits: $4,300 single / $8,550 family, with a $1,000 catch-up at 55+.

The catch: you must stay on the HDHP. Many people treat HSA like a medical savings account and drain it each year. Instead, invest it and pay current medical costs out of pocket — let the HSA compound untouched for decades.

3. Roth IRA (up to the limit)

Contribute to a Roth IRA if your income is under the threshold ($161,000 single / $240,000 married filing jointly in 2025, with phase-outs below). Limits: $7,000/year ($8,000 if 50+).

Why here and not lower? Roth IRAs have advantages no workplace 401(k) has:

  • Withdraw contributions (not earnings) tax- and penalty-free at any time. This makes a Roth IRA a backup emergency fund.
  • No required minimum distributions (RMDs) in your lifetime. Your money can compound forever if you do not need it.
  • Broader investment choices than most 401(k)s (any ETF, any stock).
  • Tax-free inheritance for heirs for 10 years after your death.

If your income exceeds the Roth IRA limit, use the backdoor Roth IRA: contribute to a traditional IRA (no income limit for non-deductible contributions) and immediately convert to Roth. Your broker processes both steps; your tax software handles the reporting.

4. 401(k) up to the annual limit

After the match, the HSA, and the Roth IRA, go back to the 401(k) and fill it to the $23,500 limit (2025, under 50; $31,000 with catch-up at 50+). Traditional 401(k) contributions give you a current tax deduction — roughly 22-35% off for most savers.

Roth 401(k) is offered by most employers now. Use Roth 401(k) if:

  • You are young/low-earning and in a lower tax bracket now than you expect later
  • You want a large tax-free bucket at retirement for flexibility
  • You have already maxed traditional accounts and want more tax-free space

For most mid-career workers in the 22-24% marginal bracket, traditional 401(k) is slightly better because your effective retirement rate will usually be lower. Highest earners (32-37% bracket) should almost always use traditional — the current tax savings are huge.

5. Mega backdoor Roth (if your plan allows it)

Some 401(k) plans allow after-tax contributions above the $23,500 pre-tax limit, up to a total (pre-tax + employer match + after-tax) of $70,000 in 2025. If your plan also allows in-service conversions of the after-tax portion to Roth, you can build a $40,000+/year tax-free bucket on top of everything else. This is the “mega backdoor Roth” and it is a hidden benefit in many tech and finance employer plans.

Ask HR: (1) does our plan allow after-tax contributions, and (2) does it allow in-plan Roth conversions or in-service distributions? If yes to both, this is a massive wealth-building tool.

6. Traditional IRA (non-deductible) or taxable brokerage

After all of the above, you are over $50,000/year in tax-advantaged savings. The next step for most high earners is a taxable brokerage account invested in broad index funds (low turnover, long holding periods, favorable capital gains treatment). Deductible traditional IRAs are usually phased out at this income level, so non-deductible IRA contributions buy you very little.

A shorter rule for normal savers

If all of the above feels overwhelming, here is the 80/20 version:

  1. Contribute enough to your 401(k) to get the full employer match.
  2. Max your Roth IRA ($7,000).
  3. Go back to the 401(k) and contribute as much more as you can afford, up to the limit.

For a household earning under $150,000, this alone captures almost all the optimization. The HSA, mega backdoor Roth, and non-deductible IRA refinements matter more at higher incomes or more specialized situations.

What if your employer has no 401(k)?

Many small companies and part-time jobs offer nothing. In that case:

  1. Max a Roth IRA or traditional IRA ($7,000/year).
  2. Open a taxable brokerage account and invest in broad index funds.
  3. If self-employed or have 1099 income, open a Solo 401(k) or SEP-IRA — limits are much higher ($70,000 total in 2025 for Solo 401(k)).

What if you are behind?

At 50+, you get “catch-up contributions”: extra $7,500 to 401(k), extra $1,000 to IRA, extra $1,000 to HSA. At 60-63, an expanded 401(k) catch-up of $11,250 for some plans (SECURE 2.0). These are there specifically for late-career savers making up for earlier years.

Even starting at 50 with nothing, $30,000/year at 7% for 15 years grows to $780,000. Combined with Social Security, that is a livable retirement for most households.

Project the outcome

Pick a priority, commit to the dollar amount, and stop second-guessing. Our retirement calculator lets you plug in combined annual contributions across all accounts and see the projected balance at retirement age. The order above is optimization — the act of contributing is the decision that matters most. A taxable account funded at age 28 beats a perfectly-optimized Roth IRA started at 42.