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Planning & decision tool

Next-dollar waterfall

When you have an extra dollar to save, where should it go first? This walks through the common order for putting savings to work: paying off high-interest debt, capturing the full employer match, an HSA, the main retirement accounts, backdoor and mega-backdoor Roth space, then a taxable account. At each step it explains the reasoning and shows the current contribution limits, so you can see how the order shifts for your own situation.

Background reading: Foundations & order of operations

A common framework

This is a common framework, not your plan. The right order and amounts for your specific accounts, income, and goals are a personalized decision.

  1. 1.High-interest debt
    Active

    Paying down a high-rate balance is a guaranteed, tax-free return equal to that rate, which few investments reliably beat.

  2. 2.Capture the full employer match
    Active

    The matched portion is an immediate return before any market growth; unmatched dollars are forgone permanently.

    • The match amount depends on your plan formula and is not computed here; capture the full match your plan offers.
  3. 3.HSA (if eligible)
    Active

    The only account with a deduction going in, untaxed growth, and untaxed qualified withdrawals.

    HSA contribution limit, self_only (annual maximum)$4,400
  4. 4.Max the main tax-advantaged accounts
    Active

    Large statutory shelter: contributions are sheltered now and taxed at withdrawal (traditional), or taxed now and tax-free later (Roth). Which one is your decision and turns on your rate now versus later.

    401(k)/403(b) elective deferral limit (annual maximum)$24,500
    IRA contribution limit (annual maximum)$7,500
    • At your income a direct Roth IRA contribution is disallowed, so the Roth route here runs through the backdoor (next tier).
    • For reference, the direct Roth IRA phaseout for single runs from 153000 to 168000 of MAGI.
    Run the numbers: Roth vs traditional simulator
  5. 5.Clear or isolate a pre-tax IRA first
    Active

    A pre-existing pre-tax IRA balance makes a backdoor Roth conversion partly taxable under the pro-rata rule. Clearing or isolating that balance (for example, a reverse rollover into an employer plan) is the framework step that precedes a clean backdoor.

    • This states the consideration; the taxable-portion math is the calculator’s job.
    Run the numbers: Backdoor Roth pro-rata calculator
  6. 6.Backdoor and mega-backdoor Roth space (if open)
    Active

    Roth space beyond the direct routes, when income or plan features open it. The per-account math is handled by the dedicated tools.

    Backdoor IRA amount equals the IRA contribution limit (annual maximum)$7,500
    Total-additions ceiling the after-tax space fills toward, IRC 415(c) (annual maximum)$72,000
    • Backdoor Roth: a nondeductible IRA contribution converted to Roth, since the direct route is closed at your income.
    • Mega backdoor applies only if your plan offers after-tax contributions with in-plan conversion. Check your plan document.
    Run the numbers: Backdoor Roth pro-rata calculator
  7. 7.Taxable brokerage
    Active

    No shelter, but no contribution limit and full liquidity, so it absorbs everything beyond the sheltered accounts.

Where this goes next

That personalized decision is a conversation with a CFP.

Assumptions and simplifications
  • Capacities are statutory maxima for the tax year, resolved against your filing status and coverage; they are not amounts you are advised to contribute.
  • The order shown is a common default, not your prescribed order; your own order can differ.
  • The employer-match dollar amount depends on your plan formula and is not computed here.
  • Per-node math (pro-rata taxable fraction, remaining after-tax space) is delegated to the linked tools.