Should I max my IRA or 401k first after a raise?
Standard financial advice recommends grabbing the employer match, switching to max out an IRA, and then returning to the 401k, leaving savers confused about the underlying strategy. This rigid order makes it difficult to figure out how to balance competing financial goals like paying off cars, saving for a house, or investing in a brokerage account.
What people tried
Every workaround mentioned in the threads below. We haven’t tested any of them — and nobody here is claiming they worked.
- 1increasing 401k contribution while lowering IRA contribution to maintain the same take-home pay
- 2maximizing the employer match first, then maxing out the IRA, and returning to the 401k
- 3Making spreadsheets to project annual savings
- 4Living off two incomes and pretending the third one doesn't exist
- 5Putting extra monthly payments toward car loans
- 6Contributing to both accounts simultaneously
- 7Reducing the 403(b) contribution down to the minimum required to capture the full employer match and shifting the rest to the 457(b)
- 8Using backdoor Roth IRAs and evaluating the rule of 55 for 403(b) withdrawals
- 9Contributing to both accounts to capture matching perks sequentially, such as filling the 401k up to the employer match first before funding an IRA.
- 10Investing into a taxable brokerage after maxing out Roth accounts
- 11Spreading monthly contributions proportionally across multiple accounts
- 12Contributing as much as the budget allows up to the legal limit
- 13Asking HR how much to contribute to get the full match
- 14Maxing out a Roth IRA first and putting the rest into the 401(k)
- 15Contributing to an HSA if available
In their words
Unedited, most upvoted first, each linked to the thread it came from.
“Why is the recommendation to reach the employer match and then max IRA and then increase 401k after that? Am I missing a piece of information that I should be considering?”source ↗
“Should I do a split for example 1.5k into each roth then 1k into brokerage? Or should I just focus on maxing out both roths first and then spend the rest of the year funding the brokerage? Does it even matter?”source ↗
“Can I keep contributing to my 401(k) even with 0% employer match?”source ↗
“I’m 26 and trying to figure out what makes the most sense for my retirement savings and overall financial goals.”source ↗
“My question is whether it makes sense to keep putting this much into my 401(k) even though there’s no employer match, or whether I should be putting some of that money into a Roth IRA, taxable brokerage account, or somewhere else.”source ↗
“I currently make around $60,000 per year, so I’m trying to figure out what makes the most sense for me in the short term.”source ↗
“For now, though, would it make more sense to reduce my 403(b) contribution to the 4% required to receive the full 10% employer contribution and direct the difference toward my 457(b)? Or is there a reason I should continue contributing more heavily to the 403(b)?”source ↗
“One thing I’m particularly interested in is whether a pre-tax governmental 457(b) makes more sense than Roth contributions if our goal is to retire around age 50.”source ↗
“I guess my main question is, if you were in our situation, how would you allocate the money? Would you focus on getting rid of the cars first, maxing out retirement accounts, saving more for a house, investing in a brokerage account, or some combination of everything?”source ↗
“Is there any benefit to putting money in my Roth 401k instead of the Robinhood Roth IRA?”source ↗
“What percentage should I contribute? 3%? (I’m new in the states)”source ↗
Where this came up
People with this problem also raised
- 3How to handle 401(k) contributions and employer matches when changing jobs
- 2How to hit max 401k contribution with whole percentage limits
- 10What funds and allocations should I pick for a new Roth IRA?
- 3Should I lower my retirement contributions to save for a house?
- 4Should I lower my 401k to pay off a mortgage faster?
- 5Should I do a Roth conversion or stick to traditional 401k?