Tax-Advantaged Accounts: The Match You Might Be Missing — Personal Finance Foundations

§ 01

Account	Tax Benefit	2025 Limit	Best For
401(k)	Pre-tax contributions, tax-deferred growth	$24,500	Employer match + high income
Roth 401(k)	After-tax contributions, tax-free growth & withdrawals	$24,500	Expect higher tax rate in retirement
Traditional IRA	Pre-tax deduction (if eligible), tax-deferred growth	$7,000	No employer plan available
Roth IRA	After-tax, tax-free growth & withdrawals forever	$7,000	Young, lower income now
HSA	Pre-tax in, tax-free growth, tax-free medical withdrawals	$4,300 (self-only) / $8,550 (family)	Triple tax advantage — the best account in the tax code

§ 02

An employer 401(k) match is a 50–100% instant return on your contribution. If your employer matches 50% up to 6% of salary, contributing 6% means getting 3% for free. Not contributing enough to get the full match is leaving money on the table.

§ 03

Match Value = Salary × Your Contribution % × Match Rate

§ 04

Check your employer’s 401(k) match formula. Are you contributing at least enough to get the full match? If not, increase your contribution today — it’s an immediate match dollar-for-dollar (subject to your employer's vesting schedule, often a 3-year cliff).

§ 05

Your employer offers a 100% match on the first 3% of salary. You earn $80K and contribute 1%. How much unclaimed match are you leaving on the table (assuming you reach the vesting cliff)?

§ 06

The optimal order: (1) 401(k) up to employer match (subject to vesting), (2) Max HSA if available (triple tax benefit), (3) Max Roth IRA (tax-free growth forever), (4) Max remaining 401(k), (5) Taxable brokerage. This order maximizes lifetime tax savings, with the caveat that match dollars belong to the employer until you vest.

§ 07

**Roth IRA income phaseout (2026):** Direct Roth IRA contributions begin phasing out at ~$153,000 MAGI for single filers and ~$242,000 for married-filing-jointly. Above ~$168,000 (single) / ~$252,000 (married), direct contributions are no longer allowed. Once you cross the phaseout threshold, the Roth IRA disappears from your options — unless you use the backdoor mechanics. **If you are near or above these thresholds, see pf-10 for how the backdoor Roth works.** **SECURE 2.0 enhanced catch-up (ages 60-63):** Starting in 2025, savers aged 60-63 may make an enhanced catch-up contribution to employer plans — up to $11,250 on top of the standard $24,500 limit, for a total of $35,750. The standard catch-up for ages 50-59 and 64+ remains $8,000. This provision (SECURE 2.0 Act §109) is less relevant for recent grads but signals that the platform tracks legislative changes that affect long-horizon planning.

Five questions · AI feedback

Sit with the ideas.

An investor puts $500/month into a taxable brokerage account but only contributes 1% to a 401(k) with a 100% match up to 5% on a $80,000 salary. What's the highest-priority change?

Why:

Sit with the ideas.

Other lessons in this course.