Best way to invest $100k
Pick the wrapper before the fund. HSA, 401(k) match, Roth IRA, mega backdoor, remaining 401(k), 529 if kids, taxable. Here's the allocator, the reason for each layer, and the traps that eat the first-timer's return.
Free, no signup, runs in your browser · IRC §402(g), §415(c), §223, §408A cited inline
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Type your income, age, and plan-permission flags. The allocator fills tax-advantaged buckets in priority order and tells you what spills into a taxable account at the end.
Share landing in a tax-advantaged wrapper
65%
$20,200 spills into a taxable brokerage. That's the remainder after every tax-advantaged bucket is topped up.
1. Emergency reserve (HYSA / T-bills)
$15,000
Three months of expenses in a boring high-yield account. This isn't investing — it's the moat that keeps you from selling stocks in a crash.
2. HSA (self-only HDHP)§223
$4,300
Deductible in, tax-free growth, tax-free out for medical. Triple-taxed on nothing. The single best wrapper in the code if you can get to it.
3. 401(k) — up to the employer match§402(g)
$12,000
Employer puts in 100% on the first 6% of pay. That's an instant, guaranteed return with no market risk. Skipping this is the single most expensive mistake you can make.
4. Backdoor Roth IRA§408A / §408(d)(1)
$7,000
You're over the direct-Roth phaseout, so it's the two-step backdoor: fund a non-deductible traditional IRA, convert to Roth same week. Watch the pro-rata rule if you already have pre-tax IRA balances.
5. Mega backdoor Roth (after-tax 401(k) → Roth)§415(c)
$30,000
Your plan lets after-tax contributions land in the 401(k), then convert to Roth in-plan. Room is the gap between §415(c) and everything else you've already put in.
6. 401(k) — fill the elective to the §402(g) cap§402(g)
$11,500
You've taken the match. Now push the elective deferral to the statutory ceiling. Pre-tax vs Roth split depends on your tax bracket now versus expected retirement bracket.
7. Taxable brokerage (whatever's left)
$20,200
Direct indexing or low-turnover ETFs. This is the flexible bucket — no age gate, no penalty on withdrawal. Use tax-loss harvesting to keep the drag under 20 basis points.
Pick the wrapper before you pick the fund. Match first — it's a 100% same-day return. HSA next — nothing else in the code is triple-tax-free. Roth IRA third. Mega backdoor fourth. Remaining 401(k) fifth. 529 sixth if there are kids. Whatever's left goes taxable. That's the whole answer; the rest of this page is why the order lands where it does.
A $7,000 Roth IRA contribution, growing at 7% for 30 years, ends at about $53,000 — all tax-free. A $9,000 taxable brokerage contribution (the after-tax equivalent for a 22% bracket earner) ends at $68,500 pre-tax, roughly $58,000 after long-term-gain tax. Close, but the Roth pulls ahead once you factor in dividend drag along the way. The wrapper does the heavy lifting.
The allocator ships with 2025 IRS numbers: $23,500 elective deferral (§402(g)), $70,000 §415(c) additions cap, $4,300 self / $8,550 family HSA (Rev. Proc. 2024-25), $7,000 Roth IRA. Toggle plan flags to reflect your actual plan document. Nothing leaves your browser.
Fill buckets in this order: HSA, 401(k) up to the employer match, Roth IRA (direct or backdoor), mega backdoor Roth, the rest of your 401(k) elective, a 529 if you've got kids, and whatever's still in your hand goes to taxable brokerage.
That's it. Not a framework. Not a decision tree. An actual list, in order, that says do this first and then this. If you want the "how do I even think about this" version — the one with the risk questionnaire and the four-lens framework — the sibling page covers that. You're on the prescriptive page. So here's why the order lands where it does.
Your employer's match is a same-day 100% return. Nothing else you can buy will do that. Not a hot stock. Not private equity. Not real estate. Skipping the match to "invest better elsewhere" is the single most expensive mistake a first-timer makes on a $100k deployment. The market can't beat 100% in a year, and the match is guaranteed the moment your payroll clears.
You put money in and it's deductible. It grows tax-free. You pull it out for qualified medical and it's tax-free again. No other wrapper in the code has all three sides exempt. If you're on a high-deductible plan, this bucket beats the Roth on paper. The catch: the money's earmarked for medical, and the deposit-then-let-it-ride trick (pay medical bills out of pocket, save the receipts, reimburse yourself decades later) is the play that turns the HSA into a stealth Roth.
Direct if you're under the phaseout ($150k single / $236k MFJ in 2025). Backdoor if you're over. Both end up in the same Roth account, and both convert future dividends and capital gains from taxable to tax-free. Small annual number ($7k, or $8k at 50+), but the wrapper runs for the rest of your life and the compounding wins.
Here's the math nobody quite shows you. Say you're in the 24% bracket. To fund a $7,000 Roth IRA you need $9,210 pre-tax — pay $2,210 to Uncle Sam, land $7,000 in the Roth. Alternative: skip the Roth, put the whole $9,210 in a taxable brokerage.
Fast-forward 30 years at 7%. The Roth is $53,300 — all yours. The taxable started higher at $9,210 but grew to $70,100 — and now you owe long-term-gain tax on the $60,890 of appreciation. At 15% LTCG plus 3.8% NIIT, that's $11,470 in tax, leaving you $58,630. So the taxable wins by about $5,300, right?
Nope. That taxable account also spun off dividends every year — say 1.8% of the balance, taxed at 15%. That's a 27 basis point drag on the growth rate over 30 years. Run the numbers again with a 6.73% effective growth rate and the taxable lands at $63,900 pre-tax, $54,500 after tax. The Roth wins.
The point isn't the exact spread. It's that when you compare a Roth contribution against its taxable equivalent, the taxable side has three tax leaks nobody counts on a first pass: annual dividend tax, capital gains at withdrawal, and NIIT above the threshold. Once those are in, the Roth wins in almost every realistic path.
People discover Bogleheads, decide VTSAX is the answer, and dump $100k into a taxable brokerage while their Roth IRA and 401(k) match go untouched. The Roth room doesn't roll forward — miss a year and it's gone. Every unused $7,000 slot is worth about $53k of tax-free money 30 years from now. That's real.
The employer match is 100% instant. The alternative you had in mind — some tech stock, real estate down payment, side business — needs to return more than 100% in year one to beat it, and it won't. Take the match. Then argue with yourself about the fund menu.
High-yield savings at 4.5% feels safe. Six months of parked $100k at 4.5% (roughly $2,250 after tax) versus six months of a diversified allocation (call it 3.5% real over a random six-month window, so $3,500) — you're leaving $1,250 on the table for the feeling of not deciding. The decision fatigue is the loss.
The waterfall isn't sacred. Here's the wrinkle: three situations where the standard order isn't the right order.
The wrapper decision is 80% of the game. The fund selection is 20%. But 20% isn't nothing, so here's the rough playbook.
Total US market, total international, total bond. Something like 70/20/10, cheaper is better, done. This is the wrapper you'll never touch until you're 60, so simplicity wins. Fidelity's zero-expense index funds work. VTI + VXUS + BND at Vanguard works. Any target-date fund at 2055 or later works. Just pick one.
The taxable wrapper is where fund choice starts to earn its keep. Direct indexing (Wealthfront, Frec, Fidelity's version) reproduces the S&P 500 with 200-300 individual stocks and harvests losses at the stock level all year. Over a 10-year hold that's typically 80 basis points a year in after-tax alpha, per Parametric. Fee premium over a plain VOO is roughly 25 bp — the math works above $100k in a taxable account. Below that, VOO is fine.
Because the wrapper is Roth and the compounding window is decades, the mega backdoor is where a tilt toward small-cap value, emerging markets, or (if you swing that way) a low-single-digit allocation to Bitcoin can go. Anything you'd worry about paying capital gains tax on at withdrawal belongs here. Tax-free withdrawal turns the messy stuff into cleaner returns.
Most HSA custodians (Fidelity is the exception) require you to hold $1-2k in cash before they let you invest the rest. Fine. Above that floor, run the same index portfolio as your Roth. This is a decades-out bucket even more than the Roth is, so don't hold cash you don't need for near-term medical.
Here's the part nobody warns you about. Once your $100k is split across six accounts at four custodians, seeing what you own becomes a chore. Fidelity has the 401(k) and the mega backdoor and the HSA via a rollover. Vanguard's got the Roth IRA. Wealthfront runs the taxable direct indexing. State plan for the 529. Ally has the emergency HYSA.
That's six logins and six balance-refresh cadences and six ways to lose track of whether your Roth line is actually growing or you accidentally left an after-tax contribution stranded. wlthy rolls those six lines into one dashboard. Roth balance across all three Roth sub-accounts, taxable balance, HSA balance, 529 balance, emergency HYSA — six numbers that update together. The waterfall stays legible after the money moves.
Sources referenced
IRC §223 (HSA), §402(g), §415(c), §414(v), §408A (Roth IRA), §529; IRS Notice 2024-80 (2025 401(k) dollar limits); Rev. Proc. 2024-25 (HSA limits); SECURE 2.0 Act §126 (529-to-Roth rollover), §603 (Roth catch-up); Parametric & Wealthfront direct-indexing after-tax alpha studies. Educational only — talk to a CPA before you file.
Q1 rolls around, the bonus hits, and $100k lands in checking. You've got a week before it either finds a home or gets slowly bled into random purchases. The allocator answers the practical question: which bucket, in which order, and how much. If the mega backdoor is on autopilot through payroll, this cash goes to the Roth IRA / taxable side instead.
Vested RSUs hit brokerage, you sold the double-concentration bucket, and now $100k of proceeds needs redeployment. The waterfall's the same, except the emergency reserve and 401(k) match are usually already handled — so the cash mostly cascades to the Roth backdoor + mega backdoor room + a taxable equity index inside a direct-indexed account.
Inherited money doesn't reset the Roth IRA cap or the §402(g) elective ceiling — it's just cash. So the waterfall still runs. What changes: the tax-advantaged buckets stay tiny relative to the sum, and the taxable spillover becomes the main event. That's where direct indexing and municipal-bond ladders start to matter.
Because the Roth wrapper turns future gains from taxable into tax-free. Same fund, same market, but one wrapper leaks 15-23.8% at withdrawal and the other doesn't. Over 20+ years the tax drag is the single biggest determinant of ending value, and there's no way to catch back up — you can't retroactively move a taxable dollar into Roth.
An HSA is deductible going in, tax-free growing, and tax-free coming out — but only for qualified medical spend. The trick: don't spend from the HSA. Pay medical bills out of pocket, keep the receipts in a file, and let the HSA compound. Decades later you reimburse yourself for those old receipts, tax-free. Nothing in the Roth IRA rulebook beats a three-way tax exemption.
Yes. Even if the plan's cheapest fund is a 0.35% expense ratio — worse than what you'd get at Fidelity or Vanguard on your own — the match is a 100% same-day return. A 100% return that immediately loses 0.35% a year is still a 100% return in year one. You can roll the balance to an IRA the moment you leave the employer, so the plan menu is a temporary problem.
Depends on how sure you are about the education path. A 529 is education-specific with a state deduction (in most states) and tax-free growth for qualified spend. Roth IRA has no education-tag but can be pulled contribution-first for anything. SECURE 2.0 blurred the line by allowing $35,000 of unused 529 to roll to a Roth IRA — so the case for the 529 got a lot stronger in 2024.
After-tax. The waterfall assumes the $100k is cash you actually have and can move. If your $100k is pre-tax (e.g., you're deferring salary through 401(k)), the elective bucket is already being fed and the allocator's job shifts to allocating post-tax dollars only. Toggle the elective and match fields to reflect what's already happening at payroll.
Two triggers. First, if you've got complex assets — private company shares, a rental property with a mortgage, an inherited IRA — the tax interactions get real and a $250 flat-fee planner beats DIY. Second, if you can't get yourself to actually push the buttons. A CFP's real value on a $100k decision isn't the advice; it's the accountability that makes the money move by Friday.
Roughly $100k in a taxable account, held for 5+ years. Below that, the tax-loss harvesting alpha (typically 50-100 basis points a year, per Wealthfront and Parametric white papers) doesn't cover the 25-40 bp fee premium over a plain ETF. Above $250k it's basically free money if you'll hold the wash-sale window. In an IRA it's pointless — you can't harvest losses inside a tax-advantaged wrapper.
Yes — that's the whole point. Once your $100k is split across an HSA, a 401(k), a Roth IRA, a mega backdoor, a 529, and a taxable brokerage, seeing the six-bucket picture in one line is what wlthy does. Import balances by CSV or connect the accounts. The dashboard shows the Roth line, the taxable line, and the emergency line as three numbers that update together.
Once the $100k is placed, the hard part isn't the math — it's seeing where the money landed. wlthy pulls HSA, 401(k), Roth, taxable, 529, and emergency into a single dashboard so the waterfall stays legible.
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