Tax Optimization Calculator

Several thousand dollars a year for most people in their late 50s and early 60s, from two accounts: a pre-tax 401(k) filled to the limit, and a health savings account funded through payroll. The last working years are usually the highest-earning ones, so every deferred dollar comes off income taxed at your top rate, often 22% to 35%, and can come out later at a lower one.

The calculator compares your current contributions with the most your age allows. With its defaults, a hypothetical 61-year-old earning $185,000, married filing jointly and deferring $15,000, pays $33,862 in federal income tax and FICA. Raising the pre-tax 401(k) to $24,500 and putting $9,750 in a family HSA through payroll brings that to $28,912: a saving of $4,950 a year. Her $11,250 catch-up is on top, but because her wages are over $150,000 it has to be Roth and does not change this year's figure. The example tab walks through each step.

From the year you turn 50 you can add a catch-up to the regular limit, and in the years you turn 60, 61, 62 and 63 the 401(k) catch-up is larger (IRS). In the year you turn 64 it drops back to the standard amount. The HSA has its own catch-up from 55.

Employer contributions sit on top of these, within the overall limit of $72,000 a year excluding catch-ups. A married couple who both work each have their own 401(k), IRA and catch-up limits; the HSA family limit is shared between spouses.

From 2026, when your wages from the employer sponsoring the plan were over $150,000 in the previous year (IRS). The test uses Social Security (FICA) wages from that employer, so a partner or self-employed person without such wages is outside it, and so, usually, is someone in their first year with a new employer. The base deferral of $24,500 can still be pre-tax; only the catch-up is affected.

The calculator applies the rule using this year's wages as a stand-in for last year's: above the threshold, its optimized scenario puts only the base deferral pre-tax. That is the cost. The benefit is that Roth dollars come out tax-free, are not subject to required minimum distributions while you are alive, and do not count toward the income that sets Medicare IRMAA surcharges. For someone who expects large required distributions later, being pushed into Roth may be no loss at all. If your plan has no Roth option, ask whether it will add one: without it, the plan cannot accept catch-ups from employees the rule covers (final regulations).

Your deductions rise and your HSA contributions end once you enroll in Medicare. For 2026, each person 65 or older adds $1,650 to the standard deduction if married ($2,050 if single), and can claim the senior deduction of up to $6,000, available for 2025 through 2028 whether or not you itemize (IRS).

The senior deduction falls by 6 cents for every dollar of modified adjusted gross income above $150,000 for joint filers ($75,000 for others), so a couple both 65 or older loses it entirely at $250,000. Near that range, each pre-tax 401(k) or HSA dollar saves more than your bracket rate, because it also restores part of the deduction. The same logic applies to Roth conversions and IRA withdrawals in those years.

On Medicare, the HSA stops taking contributions, but the balance remains yours to spend tax-free on medical costs, including Part B and Part D premiums (IRS Publication 969). Because Part A is backdated up to six months when you enroll after 65, stop contributing six months before you apply for Medicare or Social Security (Medicare.gov). The HSA guide covers using the account in retirement.

Pre-tax usually wins in the peak earning years, and Roth usually wins once the paychecks stop. The comparison is your tax rate on the contribution now against your rate when the money comes out. For 2026, joint filers pay 22% on taxable income between $100,800 and $211,400 and 24% up to $403,550, while the 12% bracket runs to $100,800. A couple who retire with modest spending needs may spend several years in the 12% bracket before Social Security and required distributions begin.

That gap between retirement and required minimum distributions (at 73, or 75 if born in 1960 or later) is the time for Roth conversions. Deferring at 24% while working and converting at 12% after is the pattern this calculator supports. It fails for people who already hold most of their wealth in traditional accounts: their required distributions, stacked on Social Security, can keep them in the 22% or 24% bracket for life and lift Medicare premiums through IRMAA. For them, some Roth contributions now can be the better choice even at a high rate. The guide to Roth conversions before RMDs, the Roth vs traditional comparison and the Medicare and IRMAA guide work through the trade-off.

• Other income. Interest, dividends, capital gains, Social Security benefits, pensions and IRA withdrawals are not modeled. Enter wages only, and use the tax bracket calculator for retirement income.
• State income tax, credits and the alternative minimum tax.
• Your HSA coverage. The optimized scenario assumes a qualifying high-deductible plan and uses the coverage you choose: the self-only limit of $4,400 or the family limit of $8,750, plus the catch-up from 55.
• Two earners. The calculator uses one set of wages and one plan; run it for each spouse.
• Charitable giving from IRAs. From age 70½, qualified charitable distributions of up to $111,000 a year go straight from an IRA to charity without counting as income; see the QCD guide.

All federal figures come from Revenue Procedure 2025-32 and the IRS cost-of-living notices for 2026. Treat the result as an estimate for planning, and check large decisions with a tax professional who can see your whole return.