Should I max my 401k or HSA?

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new2bogle2
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Joined: Sun Dec 29, 2013 12:49 pm

Should I max my 401k or HSA?

Post by new2bogle2 »

For either scenario, maxing the 401k isn’t an option this year and likely for a bit more years on my current carrier path. Should I get my 401k match, then max my HSA and put the rest towards my 401k? Or, since I get some money into the HSA already, per the plan I have selected, should I just put everything else into the 401k? Or are these basically the same things?
J295
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Re: Should I max my 401k or HSA?

Post by J295 »

First method you described.
Impatience
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Re: Should I max my 401k or HSA?

Post by Impatience »

J295 wrote: Fri Oct 30, 2020 3:14 pm First method you described.
Ditto.
KlangFool
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Re: Should I max my 401k or HSA?

Post by KlangFool »

new2bogle2 wrote: Fri Oct 30, 2020 3:13 pm For either scenario, maxing the 401k isn’t an option this year and likely for a bit more years on my current carrier path. Should I get my 401k match, then max my HSA and put the rest towards my 401k? Or, since I get some money into the HSA already, per the plan I have selected, should I just put everything else into the 401k? Or are these basically the same things?

new2bogle2,

I think the answer would be none of the above. Usually, both HSA and 401K are payroll deductions. So, you have to adjust your payroll deduction to max HSA and provide a 401K match. Then, add in the additional amount into the 401K.

<< Should I get my 401k match, then max my HSA and put the rest towards my 401k?>>

Do this but you probably have to spread this out across multiple paychecks evenly.

KlangFool
bling
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Re: Should I max my 401k or HSA?

Post by bling »

new2bogle2 wrote: Fri Oct 30, 2020 3:13 pmShould I get my 401k match, then max my HSA and put the rest towards my 401k
this.
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FiveK
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Re: Should I max my 401k or HSA?

Post by FiveK »

See Investment Order and Prioritizing investments for some reasons behind the suggestions.
GoldenGoose
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Re: Should I max my 401k or HSA?

Post by GoldenGoose »

Why not max out HSA and whatever left goes to 401k? Then you can make up for the short change in the 401k with a IRA contribution later if the situation changes?
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Kintora
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Re: Should I max my 401k or HSA?

Post by Kintora »

I personally would do the following.

1. Contribute to 401k up to employer match.
2. Contribute what is needed to max HSA.
3. Max Roth IRA.
4. Max 401k.

Traditional vs. Roth for 401k and IRA will depend on your personal situation and analysis of which you consider optimal. Recommend you read the links that FiveK posted and other information on the topic. I personally am doing traditional/pre-tax for 401k and Roth for IRA. I am in the 24% marginal tax bracket.

HSA should have a high priority. It is triple tax advantaged for medical expenses, and is a great bucket to have in retirement. At 65, it can also operate similar to a traditional IRA for non-medical expenses as well.
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