I've wondered about this too. I am making $40K this year and I've just been contributing up to my employer's 5% match also. I paid my loans off last year and I'm maxing out my HSA this year. I had this goal for myself to do the max $5500 to the IRA this year, and to also amass an after-tax savings pile of $10,000. However, after doing more reading here and on Madfientist, I've come to realize maxing the 401K is a smart strategy.
But what is more important if you're in a low tax bracket like I am? Maxing out the 401K or maxing out the Roth IRA? Not sure what kind of raise I'll get next year, but I highly doubt I can afford to max out both. Which should be the priority?
Great question. It would be nice to have a definitive answer based on information knowable today, but that isn't the case.
Fortunately for anyone just starting, a likely-enough correct answer is "either one". Some assumptions behind that answer below. Note that "trad" refers to traditional IRA, 401k, etc., and "Roth" refers to Roth IRA, 401k, etc.
1) at some point you will withdraw money from a trad that will be taxed at a marginal rate even lower than you pay today
2) at some point you will withdraw money from a Roth that, had it been in a trad, would have been taxed at a marginal rate higher than you pay today
If you believe #1 is incorrect (e.g., if you will have other income from a pension, etc. so the trad withdrawals will always be taxed at 15% or more), skip the trad.
If you believe #2 is incorrect (e.g., if you expect never to be in a higher marginal bracket than you are now), skip the Roth.