Retirement Vehicles Explained
401(k), IRA, Roth, SEP, Solo 401(k) — which one, how much, and why the order matters more than the amount.
“A 401(k) and an IRA are not competing brands of erectile dysfunction. They're retirement accounts, and you probably should have both.”
What you'll learn
Order of operations: 1) 401(k) to employer match (free money), 2) HSA (triple tax-advantaged), 3) IRA (Roth or Traditional up to $7,000), 4) Back to 401(k) up to max ($23,500 for 2025), 5) Taxable brokerage.
Roth vs Traditional: Roth = taxed now, grow tax-free. Traditional = tax deduction now, taxed on withdrawal. Best heuristic: if your current tax rate is higher than your expected retirement rate, go Traditional. Otherwise, Roth.
Self-employed options: SEP IRA (up to 25% of net earnings, max $70,000 for 2025) — simple. Solo 401(k) (employee deferral + employer contribution, same overall limit) — more capacity, more paperwork.
Roth conversion ladder: convert Traditional IRA to Roth in chunks each year while keeping your taxable income in a low bracket. After 5 years, you can withdraw contributions tax-free. Early retirement hack.