Where should your next $6k go on a $100k salary?
On a $100,000 salary with no employer match, the ordering is decided by tax alone. Each $6,000 into a pre-tax account saves about $1,620 this year at your 27% combined marginal rate, and the same money in a Roth is taxed now and never again.
With no employer match the first step disappears and the order is decided by tax. That makes the decision closer than it looks, and it means the honest answer depends on a comparison between your tax rate now and your tax rate in retirement, which nobody knows exactly.
A pre-tax contribution is worth exactly your MARGINAL rate, not your average one. At $100,000 the federal marginal rate is 22%, and with state tax the combined figure is about 27%. So $6,000 into a 401(k) reduces this year's tax by roughly $1,620. That is a real, immediate, certain saving, and it is the strongest argument for pre-tax at a high income.
A Roth is the same money taxed now instead of later, which makes the comparison a bet on rates rather than a free lunch. Pay 27% now and nothing later, or nothing now and your future rate later. If your retirement rate is lower, pre-tax wins; if it is higher, Roth wins; if they are equal, the two are mathematically identical. What tilts it in practice is that a Roth also has no required minimum distributions and its withdrawals do not raise the income that decides your Medicare premium.
The HSA sits above both when it is available, and it is the account people most often overlook. Contributions are deductible, growth is untaxed, and withdrawals for medical costs are untaxed too, which no other account offers. It also avoids payroll tax through an employer plan, a saving neither a 401(k) nor an IRA gives you.
Then the size of the decision, which is worth keeping in proportion. $6,000 invested for thirty years at 3.9% after inflation is about $18,817 in today's money. The gap between the best account and the second-best for that money is real but modest; the gap between investing it and not is the whole amount. Getting the order roughly right and contributing consistently beats getting the order perfectly right and delaying.
What this leaves out. Whether you have access to a 401(k) at all, which decides most of the list. The Roth IRA income phase-out, which closes direct contributions above a threshold. Vesting schedules, which can mean a match is not yours until you have stayed a while. And any need for the money before 59 and a half, which is a genuine argument for a taxable account and for Roth contributions, since those come out at any age.
Where the money goes vs outcome
The same question at every where the money goes, so you can use the one you believe.
| Where the money goes | What $6,000 is worth |
|---|---|
| 401(k), no match available | no match to collect, so this is not the first call |
| HSA, if you have a high-deductible plan | saves $1,620 in tax, and the growth and withdrawals are untaxed for medical costs |
| Roth IRA, up to $7,500 | taxed now, never again, and contributions come out at any age |
| 401(k) beyond the match, up to $24,500the first call | saves $1,620 in tax this year at 27% |
| Taxable brokerage | no limit and no lock-up, but gains and dividends are taxed along the way |
Single filer taking the standard deduction. The combined marginal rate is the federal bracket plus the 5% blended state default; name your state on a plan and the real schedule applies. Limits are the current-year IRS figures for someone under 50.
Assumptions
- Salary
- 100000
- Employer Match Percent
- 0
- Employer Match Dollars
- 0
- Federal Marginal Rate Percent
- 2200%
- Combined Marginal Rate Percent
- 2700%
- Tax Saved On Pretax Contribution
- 1620
- Contribution
- 6000
- Value After30 Years Todays Dollars
- 18817 yr
Frequently asked
Where should I put my next $6k on a $100k salary?
With no match, an HSA first if you have a high-deductible plan, then a Roth IRA, then the 401(k), then taxable. Each $6,000 of pre-tax saves about $1,620 at your 27% combined rate.
How much is a pre-tax contribution actually worth?
Your marginal rate, which at $100,000 is about 22% federal and 27% including state. On $6,000 that is roughly $1,620 off this year's tax bill.
Roth or traditional?
A bet on rates, not a free lunch. If your tax rate in retirement is lower than the 27% you face now, traditional wins. If it is higher, Roth wins. At equal rates they are mathematically identical, and the tiebreakers are that a Roth has no required distributions and does not inflate the income used to set Medicare premiums.
Why is the HSA so highly rated?
It is the only account that is untaxed at all three points: going in, while it grows, and coming out for medical costs. Through an employer plan it also avoids payroll tax, which no retirement account does.
Does getting the order wrong cost much?
Less than not contributing. Missing an employer match is genuinely expensive, and after that the differences between accounts are meaningful but small next to the gap between saving and not. $6,000 invested for thirty years is about $18,817 in today's money whichever wrapper it sits in.
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