New grad.. crappy employer contribution. help!

Investing
#1

Hi, I am 26 years old and just finished grad school last year. I have over $120k in student loan debt, I owe $12k on my car, and we have a mortgage on the house. I am comfortable putting $6,000/year towards investments.
The problem is, my company offers a 401k but does not match anything. I have been putting some money into the 401k since starting my job a year ago since I did not know anything that I know from taking the course. Following the PFC checklist, the next option is the HSA. So, am I to put my contributions in the HSA (ill max out the $3,650), and then everything else needs to go into the ROTH IRA? (remaining $2,350) It seems odd to me to put more money into the HSA than the retirement fund?

Thank you for any help you can provide!

#2

Hmm I was curious myself so I did quick research and found this article that could offer additional guidance.

Here are a some takeaways I understood.

HSA

  • triple tax benefit and if you have extra cash to pay for out of pocket medical expenses, your HSA will certainly grown quicker.
  • you can withdraw/get reimbursed at any age for health-care expenses.
  • You can withdraw from your HSA for any reason after 65 but for non Healthcare expenses, you’ll be taxed exactly as an IRA or 401(k) withdrawal.

ROTH IRA

  • no triple tax benefit
  • can begin withdrawing at 59 1/2 years of age without penalty. There are exceptions to the early withdrawal penalty, such as a first-time home purchase, college expenses, and birth or adoption expenses. You’re not restricted to Healthcare expenses.

There’s a section towards the end of the article about a possible drawback for having too much money in an HSA. It talks about inherited HSAs, etc. Inherited HSAs/Roth IRAs have different tax implications depending on who the beneficiary. That’s if you’re thinking that far ahead.

I’m sure other people will add to more what I wrote.

#3

Chris is on the right path. Read this article and if you have further questions let me know.