Retirement Saving in America · Part 1

The Wealth
Waterfall

The 2026 contribution order, explained as water pressure rather than percentages.

All limits per IRS Notice 2025-67 and Rev. Proc. 2025-19. Educational only — not individualized investment, tax, or legal advice.

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The shift

Stop thinking in percentages. Start thinking about plumbing.

Saving for retirement usually feels like trying to catch rain in your hands. This system changes the physics of your income.

Think of your paycheck as a primary faucet. Install an ordered series of buckets and valves and you decide exactly where the water goes.

The old wayTrying to catch the rain
The new wayEngineering the plumbing
The resultTax shields maximized, nothing spilled
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Bucket 1 · The main vat

401(k) / 403(b): core growth and tax deferral.

System goalTax deferral
Second inletEmployer match
Unlocks atAge 59½

Rule of physics

Never shut off a free water source. If your employer offers a match, route enough income to open that second valve all the way.

System constraint

Water inside this tank is locked tight until age 59½.

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Capacity · 2026

Total capacity widens with your age.

Standard deferral · under 50$24,500
Catch-up · 50–59 or 64++$8,000
Super catch-up · ages 60–63+$11,250
Under 50$24,500
Ages 50–59 or 64+$32,500
Ages 60–63 SECURE 2.0 super catch-up$35,750
Maximum system volumeYour deferrals plus employer contributions$72,000
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New directional valve · SECURE 2.0

For high earners, catch-up water now flows to Roth.

$150,000

If your 2025 FICA wages exceeded this threshold, your 2026 catch-up contributions must be made as Roth — after-tax.

A · under $150,000Standard directionPre-tax
B · over $150,000Required directionRoth
If your plan has no Roth optionUntil the valve is installedLocked
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Outside the locked plumbing

Keep a dedicated fire bucket first.

Before pushing water into locked, long-term barrels, fill your emergency high-yield savings account. This bucket is insurance, not growth.

VehicleHigh-yield savings
PurposeEmergency insurance
Capacity6–12 months of expenses
AccessImmediate, no penalty
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For business owners

Swapping the standard vat for custom equipment.

Solo 401(k)SEP IRASIMPLE IRA
Best fitOwner-only operationHigh profit, few employeesFewer than 100 employees
2026 volume$72,000 base · $80,000 with catch-up · $83,250 with super catch-up$72,000 or 25% of compensation — whichever is less$17,000 base · +$4,000 at 50+, for $21,000
Character$24,500 employee deferral plus large profit-sharing capacityEmployer side only; no employee deferrals permitted25% early-withdrawal penalty if touched within the first 2 years
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Bucket 2 · The filters

Overflow paths to the precision tax filters.

Once your primary employer vat reaches the match or its maximum capacity, the overflow should be caught by filters: Individual Retirement Accounts and Health Savings Accounts.

These are engineered for highly optimized tax efficiency.

IRA · under 50$7,500
IRA · 50 and over+$1,100 catch-up$8,600
HSA · self-only$4,400
HSA · family$8,750
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The armored tank

The HSA carries three layers of armor against tax.

Tax-free entryContribution
Tax-free growthInvestment
Tax-free exitFor qualified medical expensesDistribution
2026 · self-only$4,400
2026 · family$8,750
Catch-up · 55++$1,000
System requirementA high-deductible health planRequired
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Income walls

Your income decides how water enters the Roth filter.

Under $153,000Single filerFull direct contribution
$153,000 – $168,000Partial phase-outReduced
Over $168,000BlockageBackdoor Roth

For married couples filing jointly the range is $242,000 – $252,000.

Above the wall, direct contribution is closed — but conversions are not. The backdoor Roth strategy routes around the blockage.

Either way, total IRA flow is capped at $7,500 under 50, or $8,600 at 50 and over.

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Bucket 3 · The final reservoir

Absolute freedom, at the cost of tax friction.

Bucket 3 is your taxable brokerage account. It has no lid and no capacity limit. Reaching it requires no permission from the IRS — which makes it the primary vehicle for an early exit at 45 or 55.

The advantageUnlimited contributions, full liquidity, no age penaltyFreedom
The frictionTax on dividends and capital gains every yearTax drag
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The 2026 master waterfall

The order is what limits every wasted drop.

Tier 1

401(k) to the match, plus the fire bucket

An instant 100% return on matched dollars, plus 6–12 months of core liquidity.

Limit: the full match

Tier 2

Max the HSA

The best undisputed triple-tax math available.

Limit: $4,400 self-only / $8,750 family

Tier 3

Max the IRA or Roth IRA

Optimized growth and far wider control over what you own.

Limit: $7,500 base / $8,600 with catch-up

Tier 4

Taxable brokerage account

Infinite overflow capacity for early access without IRS locks.

Limit: none

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In closing

Master the plumbing. Control your wealth.

A properly ordered financial system runs on physics, not willpower. Install the valves, respect the capacities, and let gravity do the work.

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All limits reflect IRS Notice 2025-67 and Rev. Proc. 2025-19. This presentation is educational and not individualized investment, tax, or legal advice. Consult a qualified tax professional or financial adviser to adapt these plans to your circumstances. Monies Wealth LLC — Registered Investment Adviser, State of Texas, CRD #327872.

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