Tax-Advantaged Accounts: 401(k), IRA, and HSA Basics
Tax-advantaged accounts let your investments grow without annual tax drag. Using them well can be worth as much as picking good funds.
401(k) / 403(b)
Employer plans funded from your paycheck. Traditional contributions lower today's taxes; Roth contributions grow tax-free. Many employers match part of your contribution — essentially free money.
IRA (Traditional and Roth)
Accounts you open yourself at a brokerage. Roth IRAs are funded with after-tax money and qualified withdrawals are tax-free; income limits apply. Traditional IRAs may be deductible depending on income and workplace plan coverage.
HSA
Available with a qualifying high-deductible health plan. Contributions are deductible, growth is tax-free, and withdrawals for qualified medical expenses are tax-free — a rare triple advantage.
A common priority order
- Build an emergency fund and pay off high-interest debt.
- 401(k) up to the full employer match.
- HSA (if eligible).
- Roth or traditional IRA.
- Back to the 401(k) toward the limit.
- Taxable brokerage account.