HSA Contributions Over 401(k) for High Earners with $2,700 Tax Impact

Under SECURE 2.0, high earners earning over $150,000 must make Roth-only 401(k) catch-up contributions, losing federal deductions of up to $2,700 annually. Instead, they are advised to prioritize Health Savings Accounts (HSA), with a maximum annual contribution of $9,750 compounding at 7%, potentially totaling around $135,000 tax-free after 10 years. For couples in the 32% tax bracket, the federal savings from HSA contributions can exceed $3,100. This shift affects financial planning strategies for retirement for individuals aged 50 and above, promoting HSAs over traditional 401(k) contributions.