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Rob Berger - The Optimal Order to Fund Retirement Accounts

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Author: Rob Berger
Categories: Personal Finance
Tags: finance
Views: 2 · Last viewed: 2026-10-15 07:49 UTC

Short Summary

Main recommendation: Save in this order: (1) contribute enough to your workplace 401(k) or similar plan to capture the full employer match, (2) max out an IRA (usually a Roth IRA), (3) max out an HSA if you have one and can afford to leave it invested, (4) return to max out the workplace plan, and (5) use a taxable brokerage account for any remaining savings. The speaker notes that the first step is non-negotiable for almost everyone, and that the order can be changed depending on personal circumstances.

Key Points

  • The employer match is the strongest first move; the speaker's example of a $70,000 earner saving 10% with a match shows a retirement total roughly a third larger after 30 years ($1,750,000 without an employer match, growing by about $500,000 more with the match, per his assumptions).
  • The speaker would prioritize the match even over paying down debt, saying he doesn't see a reason to "give away free money."
  • An IRA in step two offers broader, low-cost investment options than many workplace plans, and a Roth IRA starts the five-year clock needed before tax-free withdrawals of earnings.
  • Roth IRA contributions can be withdrawn penalty- and tax-free at any time, so they can serve as a backup emergency fund if needed.
  • An HSA gets a triple tax advantage (deductible contributions, tax-free growth, tax-free withdrawals for eligible medical expenses), which is why it is placed third.

Details Worth Noting

  • Concrete instructions:
    • Step 1: Contribute at least enough to your workplace plan (401(k), 403(b), or TSP) to get the full employer match. Matches are often 50 cents on the dollar up to 6% of salary, or dollar for dollar up to 6%, depending on the plan.
    • Step 2: Open and max out an IRA. Choose a Roth IRA for most people; consider a traditional IRA if you are in the top federal tax brackets or live in a high-income-tax state. Open it at a brokerage such as Fidelity, Schwab, or Vanguard for low-cost index funds.
    • Step 3: If you have an HSA and can pay current medical costs out of pocket, max it out for retirement. Keep every health care receipt; you can reimburse yourself tax-free at any later time, even decades later.
    • Step 4: Return to the workplace plan and max it out.
    • Step 5: Put any further savings into a taxable brokerage account, which the speaker keeps in low-cost, tax-efficient stock index funds.
    • Deviation option A: If you prefer simplicity, max the 401(k) before opening an IRA. If you may later roll into a Roth IRA, put a small amount in it to start the five-year clock.
    • Deviation option B: Move the HSA above the IRA and even above maxing the 401(k), given its tax advantages.
  • Non-medical HSA withdrawals before age 65 incur a 20% penalty (not the 10% IRA penalty), and the age threshold is 65 rather than 59½. After 65, non-medical withdrawals are taxed like a traditional account without penalty.
  • The speaker and his wife save all health care receipts, which have reached thousands of dollars in reimbursable amounts.
  • The speaker presents this as his personal view and points to his book Retire Before Mom and Dad (page 175) and a linked article for the math; this is not professional financial advice.

Bottom Line

Capture the full employer match first, then follow the ordered sequence, adjusting the IRA-versus-401(k) and HSA priority to fit your own tax situation and investing preferences.