US Tax Tools · 08

Where should the next dollar go?

401(k) match → HSA → Backdoor Roth → fill 401(k) → Mega Backdoor → taxable. The right order saves more tax than the right total.

Your income and budget

Annual salary ($)

Filing status

Annual savings capacity ($)

Match, HSA and plan features

Employer 401(k) match (% of salary)

HSA coverage

Mega Backdoor Roth available?

Total annual contributions

$112,500

73% tax-advantaged

Your money

$100,000

Employer match

+$12,500

Tax saved (est.)

+$7,816

Step 1: 401(k) employer match

$12,500/yr

1:1 employer match. 100% return on this slice; always do it first.

Step 2: HSA

$8,550/yr

Triple tax-free (federal + state + FICA via payroll). Highest-leverage US account.

Step 3: Backdoor Roth IRA

$7,000/yr

Backdoor route required; watch the pro-rata rule on existing pre-tax IRA balances.

Step 4: Fill 401(k) to $23,500

$11,000/yr

Fill remaining 401(k) elective. Use Traditional if current bracket exceeds expected retirement bracket.

Step 5: Mega Backdoor Roth

$34,000/yr

Mega Backdoor: after-tax 401(k) contribution then in-plan Roth conversion.

Step 6: Taxable brokerage

$26,950/yr

Taxable overflow. No shelter, but no contribution cap; tax-loss harvesting still helps.

Solid but with room to improve. Often this means HSA isn't maxed (or you don't have HDHP coverage) or Mega Backdoor isn't being used despite plan support.

2025 IRS limits embedded: 401(k) employee $23,500, total 401(k) $70,000, HSA $4,300 self / $8,550 family, Roth IRA $7,000 with phase-out $150-165k single / $236-246k MFJ, Social Security wage base $176,100. Federal marginal rate approximated from 2024 brackets.

Every dollar, in the right account.

Worth sequences contributions against your actual employer plan, HSA eligibility and Mega Backdoor availability, and surfaces the unused room. Join the waitlist.

Frequently asked questions

Why is HSA second, ahead of Roth?

Because HSA is the only triple-tax-free account: pre-tax in (federal + FICA via payroll + state in conforming states), tax-free growth, tax-free out for medical. The combined tax saving on the contribution is typically higher than any other dollar in the waterfall.

Why Backdoor Roth before filling 401(k)?

Because the Roth IRA $7,000 cap is small and disappears if not used in the calendar year. The 401(k) employee elective ($23,500) has the same urgency but the Backdoor is more easily missed at high incomes, capture it before filling the deductible 401(k).

What's the Mega Backdoor Roth?

After-tax 401(k) contribution (above the $23,500 employee elective limit, up to the $70,000 total 401(k) limit minus employer match), then in-service Roth conversion of those after-tax dollars. Only works if your plan documents allow after-tax contributions AND in-plan Roth conversion. Worth $30-40k of extra Roth room per year if available.