Retirement Accounts for PTs, OTs, and SLPs: Where to Put Your Money First

Where should a physical therapist, OT, or SLP invest? Here is my prioritized list: first, capture the full employer 401(k)/403(b) match, then max out HSA if you qualify, followed by maxing out 401(k) or 403(b), then Roth IRA, then 457(b) if you have one, and if anything is left over, throw it in a taxable brokerage account. This order of operations maximizes what you keep after taxes. The details are explained below.

Key takeaways

• In your 401(k)/403(b), lean pre-tax over Roth. If you're planning to reduce hours or retire early, you'll be in a lower tax bracket in retirement than you are now, which makes the pre-tax deduction the better deal.
• Fund your accounts in order: employer match, then HSA if eligible, then max your 401(k)/403(b), then Roth, then a 457(b) if you have one, then a taxable brokerage account.
• Roth vs. traditional is based on your tax rate now versus your expected rate later. Traditional lowers your taxable income today. Roth lowers your taxes in retirement. Both are useful in their own ways.
• A 457(b) is excellent, if it is available to you. It's mainly a government-employer benefit (public schools, state and county facilities).
• A taxable brokerage account is your bridge to early retirement. No contribution limit and no withdrawal penalties, so it funds the years before 59½. Just avoid selling without reason, since selling triggers a tax bill.
• 2026 limits: IRA $7,500; 401(k), 403(b), and 457(b) $24,500 each; HSA $4,400 single, $8,750 family.

What's in this guide

• The goal: minimize taxes, maximize growth
• The three account types
• The order to fund your accounts
• The HSA
• Why the 401(k) comes before the Roth IRA
• What about a traditional IRA?
• Clinician accounts: the 457(b)
• The taxable brokerage account
• Next steps
• Common questions

The goal: minimize taxes, maximize growth

The fund you buy decides what you own. The account you hold it in decides how much of the growth you keep after taxes. Over the span of a 20-year career that difference runs into six figures.

Here is one scenario run through three account types. Say you put $1,500 of take-home pay toward investing every month for 20 years, earning 7% after inflation. Because a traditional 401(k) is pre-tax, that same $1,500 of take-home buys $1,923, since the money you would have paid in tax goes in too. Check out what the totals look like after 20 years.

Illustrative. Assumes $1,500/month of take-home pay invested for 20 years at a 7% return after inflation, a 22% federal bracket while working, and 15% long-term capital-gains tax. The retirement rate assumes about $50,000 of annual spending drawn from the 401(k), which for a single filer falls in the 12% federal bracket (your effective rate after the standard deduction is lower, so 12% is conservative; a married couple would pay less). Spending much more would push you into higher brackets and narrow traditional's edge. State tax ignored.

The pre-tax 401(k) comes out ahead, the Roth is $101,000 behind and comes out tax-free, and the taxable account trails the 401(k) by $187,000 due to tax on dividends every year and capital-gains tax when you sell. The big variable that changes the outcome for this scenario is your tax bracket at retirement. This assumes 22% bracket now and 12% in early retirement. If your retirement rate matches today's rate, Roth and traditional tie. Roth only wins if you expect a higher rate later. Unlikely if you are hoping to retire early or achieve Coast FI.

The three account types

Most accounts are a version of one of three tax treatments.

Tax-deferred (a traditional 401(k), 403(b), or traditional IRA): these accounts allow you to contribute pre-tax, which lowers your taxable income this year. The money grows untaxed, and you pay ordinary income tax when you withdraw it in retirement.

Roth (a Roth IRA or Roth 401(k)): these accounts require post-tax contributions, but the money grows and is withdrawn completely tax-free in retirement. A Roth does not lower your taxable income today.

Taxable brokerage: The most heavily taxed of the options, but the most flexible. You owe tax on dividends each year and capital-gains tax on the growth when you sell. In exchange you get no contribution limit and no early-withdrawal penalty.

Two more powerful accounts that depend on your specific circumstances: the HSA, the most tax-friendly account of all if you qualify, and the 457(b), a government-employer account that allows for easy early access to your money. Both get their own sections below.

One note on traditional accounts (401(k) and 403(b)). These carry required minimum distributions (RMDs), which are essentially forced withdrawals that begin at age 73 (rising to 75 in 2033) (IRS). We don't have to worry about them here, because the plan is to move that money out of your 401(k) well before then, converting it to Roth during your low-income early-retirement years. That conversion strategy is a guide of its own, coming soon.

The order to fund your accounts

To maximize your tax savings, it is important to prioritize your investing strategy:

1. Capture the full employer match. Put enough into your 401(k) or 403(b) to get every dollar your employer matches. A 50% or 100% match is an instant return nothing else comes close to. Don't leave free money on the table.
2. Fund an HSA, if you have a high-deductible health plan. It's the most tax-advantaged account there is (more below). Only available in conjunction with a high-deductible health plan.
3. Max your 401(k) or 403(b), up to $24,500 (2026). This is the bulk of your tax-advantaged saving. The scenario above showed why: the lower tax bracket in early retirement makes the pre-tax deduction worth more than tax-free Roth growth.
4. Fund a Roth IRA, up to $7,500 (2026). The Roth is a very useful bucket of money in early retirement. It allows you to essentially choose your own tax bracket when you stop working: first pull from the 401(k) until you reach the top of a low tax bracket, then take the rest tax-free from the Roth. It also carries no required distributions, and you can pull your contributions out early if you ever need to.
5. Add a 457(b), if you have one. It's another $24,500 of tax-advantaged space and can be withdrawn early without penalty. These accounts are typically reserved for government employees.
6. Open a taxable brokerage account. Once the tax-advantaged accounts are full, the rest goes here. It is a post-tax account and is also subject to capital gains tax on any growth when you sell.

Before any of this, be sure you have cleared high-interest debt and built an emergency buffer. Follow the prerequisite steps in order. Read Phase 1 foundations to learn about the full road map and where investing in these accounts fits into the larger plan.

The HSA

The Health Savings Account (HSA) is the most tax-advantaged account there is, if you have a high-deductible health plan. It's the only account that's tax-free three ways: contributions are tax-free going in, the money grows tax-free, and you withdraw it tax-free for medical costs. The 2026 limits are $4,400 for individual coverage and $8,750 for a family (IRS Publication 969). To maximize the tax utility of this account, pay your current medical bills out of pocket and leave the HSA invested to grow. Save the receipts, and you can reimburse yourself tax-free years later. This acts as a tax-free income source in early retirement. After 65, the HSA also works like a traditional IRA/401(k) for non-medical spending. The HSA gets its own guide, coming soon, including the pay-cash-versus-spend-now decision.

Why the 401(k) comes before the Roth IRA

A source of confusion among many therapists is why the 401(k) comes before the Roth IRA, when most order-of-operations advice says to fund the Roth first. The choice comes down to two variables: your tax rate now versus your tax rate when you'll pull the money out.

If your income today is higher than your expected income in retirement, choose traditional accounts first. For most therapists working toward achieving financial autonomy ASAP, your taxable income in early retirement will most likely be lower than your full-time clinician income now. Your taxable income drops because what you pull from your portfolio each year is determined by your expenses. You no longer need to earn extra income to save.

If you expect to have a higher income in retirement, contribute to Roth first. This would be the case if you are pursuing a luxurious retirement lifestyle at normal retirement age or saving aggressively for Chubby FIRE.

For therapists, the popular "always choose Roth" advice assumes your income will keep climbing into retirement. This is the default assumption in American career culture and does not factor in the unique options that we have to work less earlier in our careers. For those of us aiming to pull those levers, traditional pre-tax accounts can result in a difference of over $100,000 after a 20-year career. (See the table above.)

So fill the pre-tax 401(k) first, then the Roth IRA right after. Roth still offers valuable tax-advantaged savings that are flexible in early retirement. Holding some of both allows you to pull from the traditional account up to the top of a low bracket, then take the rest tax-free from Roth.

If you're pursuing PSLF or on an income-driven repayment (IDR) plan, there's another reason to favor traditional: pre-tax contributions lower your adjusted gross income (AGI) and your monthly loan payment, while Roth does not. The AGI optimization guide covers how to use that.

What about a traditional IRA?

A separate question is where a traditional (pre-tax) IRA fits into all of this. The case for the traditional IRA is that it offers cheaper funds and a wider menu than most employer 401(k)/403(b) plans. Unfortunately, the traditional IRA shares the same IRS bucket as the Roth ($7,500 annual limit between the two for 2026). That means any dollar you put into a traditional IRA is one you can't put into a Roth. Not a good trade unless your 401(k) plan charges unusually high fees. Learn how to audit your employer's plan to make the decision for yourself (how to read your plan menu).

There are times we strategically use a traditional IRA to get money into a Roth. The backdoor Roth is a workaround for when your income is too high to contribute to a Roth IRA directly: you put money in a traditional IRA as a "post-tax" contribution and convert it to Roth. It's worth knowing the "pro-rata rule" can complicate it if you already hold pre-tax IRA money, which is one more reason to keep your pre-tax saving in your 401(k) rather than an IRA.

If your plan allows it, there is even a strategy called the "mega backdoor Roth," which allows for up to $40,000 per year in Roth savings. I was able to make this strategy work for me by finding an employer who had a plan that facilitated it, but it is quite rare for the account to provide the path. More on this strategy coming soon to its own guide.

Clinician accounts: the 457(b)

An additional, but somewhat rare account worth knowing about is the 457(b), because it has a perk nothing else does: with a governmental 457(b), there's no 10% early-withdrawal penalty, unlike a traditional employer pre-tax account. You can reach the money before 59½ without a penalty. For someone building toward an early exit, this is a massive opportunity to have a flexible income source.

The catch is that it is available only to government employees.

A governmental 457(b) is offered by state and local government employers, and every eligible employee can join. For therapists that mostly means public schools (school-based SLPs, OTs, and PTs), state university medical centers, and county or city facilities (IRS list). A non-governmental 457(b), the kind at a private nonprofit hospital, is limited to a small group of executives and highly paid staff, and the balance is exposed to the employer's creditors if the hospital runs into financial trouble (IRS). Most staff therapists are not eligible for those accounts anyway.

So if you work in private practice, a for-profit SNF, outpatient, or travel, you almost certainly don't have a 457(b).

If you're a school or government clinician, you have a real edge: you can contribute up to $24,500 to a 403(b) and another $24,500 to a governmental 457(b) in the same year (2026), which roughly doubles your tax-advantaged room. Between the 457(b), Roth IRA, HSA, and 401(k)/403(b), you could potentially save more than $60,000 in tax-advantaged money per year. Combined with the PSLF perks of public-sector employment, I really can't think of a better career choice.

The taxable brokerage account

Once your tax-advantaged accounts are full, a regular taxable brokerage account is where the rest goes. It has no contribution limit and no penalty for early withdrawals. It is totally flexible and ideal for early retirement. While there are several ways to get your money out of your tax-advantaged accounts before age 59½, the taxable account just makes it simpler. It also allows you to further adjust your tax bracket in retirement as described above in the Roth section.

Two things to know about holding investments in a taxable account.

First, selling is a taxable event. Buying and holding triggers no tax; selling does, in the form of capital-gains tax on your profit. So try to avoid selling, or you'll end up with a surprise tax bill. Remember that active trading underperforms long-term holding of index funds (read the evidence here).

Second, what you hold here matters. One example: international index funds pay out higher dividends, which get taxed every year when held in a taxable account, so they're usually better kept in a tax-advantaged account. Reserve the brokerage account for domestic stocks. The full version of this, deciding which investments live in which account, is its own topic for another guide.

Next steps

Pick your accounts, fund them in order, automate the contributions and forget they exist.

From here, run your own numbers in the Investment Calculator to see what your contributions become over time. If you haven't settled on what to actually buy inside these accounts, that's the companion guide on how to invest. And when you want to see what options your portfolio buys, measured in years and options rather than dollars, read the financial autonomy guide and run your scenario in the Autonomy Calculator.

Common questions

In what order should I fund my retirement accounts?

Capture the full employer match first, then fund an HSA if you have a high-deductible health plan, then max your 401(k) or 403(b), then fund a Roth IRA, then a 457(b) if you have one, and finally a taxable brokerage account. Clear high-interest debt and build an emergency fund before any of it.

Should I choose a Roth or a traditional 401(k)?

It depends on your tax rate now versus in retirement. For most therapists planning to work less or retire early, your income in retirement will be lower than it is now, which makes the pre-tax traditional contribution the better deal. Choose Roth if you're in a low bracket now or expect a higher one later. Note that traditional lowers your AGI today and Roth does not.

What is a 457(b), and do therapists get one?

A 457(b) is a government-employer retirement account with a rare perk: with a governmental 457(b), you can withdraw the money before age 59½ without the usual 10% penalty once you leave that employer. Most therapists don't have access to one. It's mainly available to school-based and state or county clinicians. Private-practice, for-profit, and travel therapists generally have no 457(b).

Should I use an IRA or just my employer's 401(k)/403(b)?

Use both. Keep your pre-tax saving in the employer 401(k) or 403(b), where the bigger limit is, and reserve the IRA for Roth money. That gives you a tax-free bucket alongside the pre-tax 401(k), which is what lets you manage your AGI in early retirement: pull pre-tax dollars up to a low bracket, then top up tax-free from the Roth. Don't put traditional money in the IRA. Max the 401(k) before the Roth IRA unless your plan's fund menu is genuinely expensive or bad.

When should I use a taxable brokerage account?

After your tax-advantaged accounts are full. A taxable account has no contribution limit and no early-withdrawal penalty, which makes it the money you can live on before 59½. Just avoid selling without a reason, since selling triggers capital-gains tax.

Is an HSA a good place to invest?

Yes, if you have a high-deductible health plan. An HSA is tax-free three ways: deductible going in, tax-free growth, and tax-free withdrawals for medical costs. If you can pay current medical bills out of pocket and leave the HSA invested to grow, it becomes one of the most powerful accounts you have.

This is Phase 2, Step 3 of Build the Runway: use the right accounts.

Next → Should you buy a house?.

Disclaimer

I'm a physical therapist, not a financial advisor, and this is not financial advice. It's simply what I learned building my own plan. For decisions specific to your situation, talk to a fee-only fiduciary advisor or a tax professional.