Maximize Your 401(k) & HSA
After capturing your employer match and maxing your IRA, the next priority is maximizing your 401(k) beyond the match and — if you qualify — your Health Savings Account (HSA).
2026 Contribution Limits
401(k) Beyond the Match
Contributions reduce your taxable income today (Traditional 401k) or grow tax-free (Roth 401k). Many employers now offer both options. The tax-deferred compounding over decades is powerful — a dollar invested at 30 has 35 years to grow before the standard retirement age of 65.
Investment strategy: Choose low-cost index funds. In most 401(k) plans, a Target Date Fund (e.g., "Target Retirement 2055 Fund") is the simplest choice — it automatically rebalances to become more conservative as you approach retirement. Avoid funds with expense ratios above 0.20%.
The HSA: Triple Tax Advantage
The Health Savings Account is the most powerful tax-advantaged account that exists — better than an IRA or 401(k) in terms of tax efficiency, for those who qualify.
Reduces your taxable income in the year you contribute.
Invest your HSA in index funds. Growth is never taxed.
For qualified medical expenses. At 65+, withdraw for anything (like a Traditional IRA).
Who qualifies for an HSA?
You must be enrolled in a High-Deductible Health Plan (HDHP). For 2026, an HDHP has a minimum deductible of $1,700 (self-only) or $3,400 (family). You cannot be enrolled in Medicare or be claimed as a dependent on someone else's taxes.
Pro tip: Invest your HSA, don't just save it
Most people treat their HSA as a medical spending account — that's leaving significant money on the table. The optimal strategy: contribute the maximum, invest it in index funds, and pay current medical expenses out-of-pocket if you can afford to. Save your receipts. You can reimburse yourself years or even decades later — there's no time limit on reimbursements. Your HSA becomes a secret retirement account.
Retirement maxed. Final step:
Build wealth in taxable accounts and other goals.