New to this stuff (and this board) after being on my own for so long and now working for a firm with benefits. Similar questions to another thread but didn't want to clutter it up.

Company provides percentage match to both 401k and Roth. Now company is offering HSA/HDHP effective Jan 1 (self funded). I'm already contributing to Roth with company match and will hit the max limit before April. 401k/Roth option is go-retire.com (never heard of it before). A few questions pop up that I can't seem to get good answers for:

1) I know the max limit is 6k contribution this year. To avoid any issues, should I switch the contributions to a 401k as I get closer to the limit to continue the match?

2) HSA starts Jan 1. Is there a better way/order to fund these things - i.e. 401k w/ match until limit, then Roth to limit, with HSA as funds allow? Or HSA first or something else?

Appreciate any guidance - late to the game and trying to play catch up with all the info out there.

What if your 401k is the Roth option? Would you move that up in the order? Seems that it would be the same as a Roth IRA at that point with just more money that you can contribute.

Bobcat-Ag said:

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What if your 401k is the Roth option? Would you move that up in the order? Seems that it would be the same as a Roth IRA at that point with just more money that you can contribute.

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Generally you have way more investment flexibility in an IRA. With the lower annual contribution cap it makes more sense for most to max that out before maxing out the 401k.

Company match amount gives you a 100% return.

HSA contributions through your payroll give you not only income tax savings but also payroll tax savings. I'm a huge fan of this tax savings.

Factor that into order of contributions. 401k match is a no brainer though

100% 401k match is rare, but I agree you're unlikely to beat whatever the match is anywhere else. Definitely give whatever you need to get the full company match.

Little confused about some of OPs questions but just some general HSA advice, some providers let you invest the funds and the earnings are tax free. I have mine with Lively. They give you two investment options: a self directed TD Ameritrade account and a guided portfolio at Denevir which has much less options available.

This might be a good place to pose a question that might also benefit the OP.

I just realized I've been treating my HSA like it's an FSA, thinking I would lose the money in the account if it wasn't spent. But, unlike an FSA, HSA funds carry forward and are portable.

So, I typically don't contribute to my HSA until I know I have the medical expenses to use it on, then I have my firm put the contributions in and I reimburse myself from the HSA. Basically, on November 1 I look back at what I've spent that qualifies (along with any expected qualifying expenses that will be coming up in Nov and Dec) and have bookkeeping contribute that amount so I can max it out and reduce my taxable income. (I use the HSA card for expenses in Jan-Oct, but only to the extent there are already funds in it from employer contributions)

But it sounds like I should always max out the HSA and use it like a 401k since the funds are investable. But can I trade individual stocks inside an HSA investment account, or is it typically just mutual funds that are available? In this market, I'd prefer to invest in individual stocks and not mutual funds. Any advice from anyone who does this would be appreciated.

Boy Named Sue said:

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But it sounds like I should always max out the HSA and use it like a 401k since the funds are investable. But can I trade individual stocks inside an HSA investment account, or is it typically just mutual funds that are available? In this market, I'd prefer to invest in individual stocks and not mutual funds. Any advice from anyone who does this would be appreciated.

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Typically HSA investment options are funds and indexes. I think investment choice varies greatly depending on the HSA carrier though, so YMMV.

Appreciate the feedback. Let me see if I can clear up my posts.

New job for firm started offering benefits (which I've never had). I was on my wife's health insurance. So I opened up a Roth retirement account with payroll deduction. Company matches 100% up to 5%, and 50% up to 8% of contribution.

I haven't hit the $6K contribution limit yet, as I only recently started contributing.

Starting 2023, we are switching family over to my firm's healthcare HSA option which firm pays my cost, but I pay for my family's for the plan. The firm won't contribute to the savings.

So, I guess I'm trying to figure out how to plan contributions based on the yearly limits. I get the Roth hits the limit in April and then starts anew. If I hit the 6k limit before April, should I adjust the retirement contribution to a new 401k to continue the company matching? Or if I hit the yearly cap for the HSA contributions, what should I contribute to next? Ideally I want to get as much free money from my work as I can.

Does that make sense?

You can have both a 401k and a Roth IRA. You can contribute to them at the same time. The contributions to one do not affect the contributions to the other.

The annual limit for 401k contributions is $20,500 (increasing to $22,500 next year). The limit for a Roth IRA is $6000. These are two separate things.

Are you sure you're not confusing a Roth IRA with a Roth 401k? Most 401k plans have a pre-tax contribution option or a post tax (Roth) option. You cannot exceed the yearly contribution limit to a 401k, regardless of whether it's pre-tax, post-tax, or some combination of both.

Ah, thank you for that - I guess it is a Roth 401k after further review. I wasn't aware of those, so thanks again.

slappy said:

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Appreciate the feedback. Let me see if I can clear up my posts.

New job for firm started offering benefits (which I've never had). I was on my wife's health insurance. So I opened up a Roth retirement account with payroll deduction. Company matches 100% up to 5%, and 50% up to 8% of contribution.

I haven't hit the $6K contribution limit yet, as I only recently started contributing.

Starting 2023, we are switching family over to my firm's healthcare HSA option which firm pays my cost, but I pay for my family's for the plan. The firm won't contribute to the savings.

So, I guess I'm trying to figure out how to plan contributions based on the yearly limits. I get the Roth hits the limit in April and then starts anew. If I hit the 6k limit before April, should I adjust the retirement contribution to a new 401k to continue the company matching? Or if I hit the yearly cap for the HSA contributions, what should I contribute to next? Ideally I want to get as much free money from my work as I can.

Does that make sense?

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Yes. As someone else mentioned, they are giving you a 100% return out of their pockets. I would contribute at least 8% of my paycheck to a combo between your IRA and 401k to get this match. Be careful not to overcontribute though with their match on your IRA especially. Next year the limit is $6,500. In reality you are getting a 6.5% match if you contribute at least 8% of your paycheck.

In terms of doing all of the IRA then moving to 401k, you don't need to necessarily do it like that. You could do both simultaneously.

With the 6.5% match, to max out the $6,500 on the Roth IRA, you need to contribute $6103.28 over the course of the year. If you get paid 26 times a year, that is roughly $234.70/paycheck.

If your paycheck is greater than $2,934 per pay period (given 26 pay periods), then you can max out the IRA with that $234.70/paycheck contribution and contribute the remainder up to 8% of your paycheck into the 401k. For instance if your paycheck per pay period (given 26 periods) was $3846.15, or roughly a $100k salary, you would contribute $234.70/paycheck to the Roth IRA then at least $73/paycheck to the 401k. This would represent a total paycheck contribution of 8% and they would match you with 6.5%.

After doing the math and typing all that out, it may make more sense to hit the IRA limit then switch to 401k...may be easier to calculate everything and not have some fudge up at the end of the year. Also gives flexibility if you get bonuses, salary changes, etc.

*DISCLAIMER: I am not a financial advisor. Any decision you make is your own.
*2nd DISCLAIMER: There's a chance I messed up some math or my thought process may be wrong. Maybe someone else can vouch though.

Something I just thought of too...to make your life easier you could always ask if they would put all of their matching $$$ into the 401k and not the IRA.

Do people really keep track of contributions to Roth IRA?

I could go back on tax forms but I have no idea how much has been invested in the Roth IRA's.

If you max it out every year, it should be easy to keep track. Otherwise, I know Fidelity will tell you.

Do people NOT keep track of all their accounts? How else are you supposed to track your progress? I'll never understand that.

I track every account and update my spreadsheet each month.

As mentioned above. If you max your 401k in April aren't you leaving match on the table? Most match 50% up to 6% for example. If you put in 15% they still only match with 3%. So if you max out, they stop matching anything.

I think you are confusing the maximum values for an IRA contribution and the max into a 401K. IRA is $6500 and 401k is $22500 not counting over 50 years old catch-up.

You may or may not be able to do both the IRA and 401k. Your income may make the IRA not deductible.

I would max the company match with my contribution in Roth 401. (Match amounts will be in regular 401k).

Then, max the HSA but don't spend the funds on medical expenses. Instead keep a list of the medical expenses that would have qualified for use later in life. Invest the HSA funds in the market. Fidelity has a good HSA program. Watch out for fees at HSA banks/brokerages. If HSA is used as an investment vehicle and you can afford to pay the medical costs out of pocket, then it behaves like the perfect combination of IRA and Roth IRA. Pre tax money going in. No taxes on gains or withdrawals coming out.

Boy Named Sue said:

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This might be a good place to pose a question that might also benefit the OP.

I just realized I've been treating my HSA like it's an FSA, thinking I would lose the money in the account if it wasn't spent. But, unlike an FSA, HSA funds carry forward and are portable.

So, I typically don't contribute to my HSA until I know I have the medical expenses to use it on, then I have my firm put the contributions in and I reimburse myself from the HSA. Basically, on November 1 I look back at what I've spent that qualifies (along with any expected qualifying expenses that will be coming up in Nov and Dec) and have bookkeeping contribute that amount so I can max it out and reduce my taxable income. (I use the HSA card for expenses in Jan-Oct, but only to the extent there are already funds in it from employer contributions)

But it sounds like I should always max out the HSA and use it like a 401k since the funds are investable. But can I trade individual stocks inside an HSA investment account, or is it typically just mutual funds that are available? In this market, I'd prefer to invest in individual stocks and not mutual funds. Any advice from anyone who does this would be appreciated.

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If you can afford to handle medical spend out of regular cash flow, then it's ideal to do that and not take money from your HSA. An HSA is about the most tax effective investment vehicle out there. Treat it as such if you can afford to do so.

We've been in an HSA for several years and have never touched it. Doesn't mean we won't as we get older, but I won't be deducting from it until I absolutely am forced to.

DallasAg2 said:

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Do people really keep track of contributions to Roth IRA?

I could go back on tax forms but I have no idea how much has been invested in the Roth IRA's.

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Uh, yes. Where are you contributing to your Roth IRA? Log into the platform and look at it.

Massively confusing question.