Retirement · Compared
401(k) vs IRA vs Roth IRA vs Backdoor Roth vs HSA
Most retirement savers use one or two accounts when they have access to four or five. This comparison shows what each account does, when each one fits, and the optimal stacking order for high earners.
TL;DR
For most W-2 employees: capture full employer 401(k) match first, then max HSA (if you have HDHP), then max Roth IRA (or Backdoor Roth if over the income limit), then go back and max the 401(k). For high earners above the Roth phase-out, the Backdoor Roth + Mega Backdoor Roth unlock additional space.
Side-by-side
| 401(k) | Traditional IRA | Roth IRA | Backdoor Roth | HSA | |
|---|---|---|---|---|---|
| 2025 Contribution Limit | $23,500 | $7,000 | $7,000 | $7,000 | $4,300 / $8,550 |
| Catch-up (50+) | +$7,500 | +$1,000 | +$1,000 | +$1,000 | +$1,000 (55+) |
| Tax Now | Deductible (or Roth) | Deductible (within limits) | After-tax | After-tax | Deductible |
| Tax at Withdrawal | Taxable (or tax-free Roth) | Taxable | Tax-free | Tax-free | Tax-free for medical |
| Income Limit | None | Deductibility phases out | Yes ($150-165K single) | None — that's the point | None |
| RMDs at 73 | Yes | Yes | No | No | No |
Each option, in depth
401(k)
Employer-sponsored retirement plan with pre-tax or Roth contributions.
Best for: Anyone with an employer plan — especially when there's an employer match.
Pros
- High contribution limits ($23,500 in 2025)
- Often includes employer match
- Roth option available in most plans
- Automatic payroll deductions
Cons
- Limited investment menu
- Withdrawals before 59½ trigger 10% penalty
- Roth has 5-year rule
Cost: Free (employer-sponsored)
Traditional IRA
Pre-tax individual retirement account — tax-deductible contributions, taxed on withdrawal.
Best for: Lower-income savers without a workplace plan, or anyone above Roth income limits who wants pre-tax savings.
Pros
- Tax-deductible contributions (within limits)
- Unlimited investment options
- Available to anyone with earned income
Cons
- Lower limit ($7,000 in 2025)
- Deductibility phases out at higher incomes
- Taxed on withdrawal
- Subject to RMDs at 73
Cost: Free at most brokers
Roth IRA
After-tax individual retirement account — pay taxes now, tax-free forever.
Best for: Lower- and middle-income savers, plus high earners via the Backdoor Roth strategy.
Pros
- Tax-free growth and withdrawals
- No RMDs during owner's lifetime
- Contributions can be withdrawn anytime
- Best inheritance vehicle
Cons
- Income limits ($150K phase-out for single in 2025)
- Lower contribution limit
- No upfront tax deduction
Cost: Free at most brokers
Backdoor Roth
Workaround for high earners to fund a Roth IRA above the income limits.
Best for: High earners over the Roth IRA income limit who want Roth space.
Pros
- Bypasses Roth income limits
- Same tax-free growth as direct Roth
- Especially powerful for high-W-2 households
Cons
- Must navigate the pro-rata rule if you have pre-tax IRA balances
- Multi-step process
- Has been on Congress's chopping block periodically
Cost: Free — just paperwork
HSA
Health Savings Account — triple tax advantage when paired with HDHP coverage.
Best for: Anyone with an HDHP. Especially powerful for healthy households who can let it grow as a stealth retirement account.
Pros
- Triple tax advantage (deductible in, tax-free growth, tax-free for medical)
- After 65: any purpose (taxed like Traditional IRA)
- No RMDs
- Rolls over year to year
Cons
- Requires HDHP coverage
- Lower contribution limit ($4,300 single / $8,550 family in 2025)
- Investment options vary by custodian
Cost: Sometimes monthly fees from custodian
Which one should you pick?
401(k) — to the match — if you Have an employer match. ALWAYS capture this first. Free money.
HSA — if you Have HDHP health coverage. Triple tax advantage makes this the most powerful retirement account. Max it before maxing the 401(k) past the match.
Roth IRA — if you Are within the income limits ($150K phase-out for single, $236K for joint). Easy to contribute, tax-free forever.
Backdoor Roth — if you Are above Roth IRA income limits. Same end result — just an extra step. Watch the pro-rata rule.
401(k) — past the match — if you Maxed HSA and Roth and still have capacity. Go back and max the 401(k) up to $23,500.
Common questions
What's the right order to fund retirement accounts?+
For most people: 401(k) match → HSA → Roth IRA (or Backdoor Roth) → max 401(k) → taxable brokerage. This order maximizes employer free money + tax efficiency.
Can I have all of these at once?+
Yes. A high earner can have a 401(k), HSA, Backdoor Roth IRA, and a taxable brokerage all funded simultaneously. Each has its own limit and own purpose.
Is the Backdoor Roth going away?+
Periodically discussed in Congress but currently legal. We watch this closely — if legislation changes, we adjust client strategies. As of 2025, the Backdoor Roth is still fully available.
Should I do Traditional or Roth 401(k)?+
Roth if you're early career or expect higher taxes in retirement. Traditional if you're high earner today and expect lower retirement taxes. Many savers split contributions between both.
Go deeper
Free retirement account audit
We'll review your current accounts, identify gaps in your stacking strategy, and tell you what changing them would save in taxes over your career.
Educational comparison only. Not financial, tax, or legal advice. Product features and limits change — always confirm specifics with a licensed professional.