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    Investing Order of Operations

    Educational content only. This article is for informational purposes and does not constitute personalized financial, tax, or investment advice. Consult a qualified professional for guidance specific to your situation.

    TL;DR — The Sequence

    1. 1. 401K up to employer match (free money)
    2. 2. HSA if you have a high-deductible health plan ($4,400 / $8,750)
    3. 3. Roth IRA if income-eligible ($7,500)
    4. 4. 401K up to IRS max ($24,500)
    5. 5. Backdoor Roth if income exceeds Roth limits ($7,500)
    6. 6. Taxable brokerage for anything beyond

    Tax-advantaged accounts let your money grow tax-free or tax-deferred. Prioritize them before taxable accounts — the difference over 30 years can be six figures.

    Step 1

    401K up to employer match

    Free money — always capture this first

    Typically 3-6% of salary
    If you have a high-deductible health plan
    Step 2

    Health Savings Account (HSA)

    Triple tax advantage: deductible, tax-free growth, tax-free withdrawal

    $4,400 (self) / $8,750 (family)
    If MAGI < $150K (single) or < $236K (MFJ)
    Step 3

    Roth IRA

    Tax-free growth and withdrawals in retirement

    $7,500 (or $8,600 if 50+)
    Step 4

    401K up to IRS limit

    Max out your tax-deferred growth

    $24,500 (or $32,500 if 50+)*
    If income exceeds Roth IRA limits
    Step 5

    Backdoor Roth IRA

    Contribute to Traditional IRA, then convert to Roth

    $7,500 (or $8,600 if 50+)
    Step 6

    Taxable brokerage

    For savings beyond tax-advantaged limits

    No limit

    * Ages 60-63 may contribute up to $35,750 ("super catch-up") if your plan allows.

    All figures are 2026 IRS limits.

    Quick Notes on Each Account

    401K: Employer-sponsored, often with matching. Always capture the match first. Full 401K guide →

    HSA: Only available with a qualifying high-deductible health plan. HSAs provide a triple tax advantage: contributions are tax-deductible, investment growth is tax-free, and withdrawals for qualified medical expenses are tax-free. After 65, withdrawals for any purpose are penalty-free (taxed as income if non-medical).

    Roth IRA: After-tax contributions, tax-free growth. Contributions (not earnings) can be withdrawn anytime. Full Roth IRA guide →

    Taxable brokerage: Use only after maxing tax-advantaged accounts. More flexible but less tax-efficient.

    A Note on Backdoor Roth

    The Backdoor Roth lets high earners access Roth benefits by contributing to a Traditional IRA and immediately converting. It's legal and common — but you must avoid the pro-rata rule trap (having pre-tax money in any Traditional/Rollover IRA).

    Read my step-by-step Backdoor Roth guide →

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