If you've already reached your 401(k) contributions limit for the year (or soon will), congratulations! It's a big feat, and not terribly common. Only 14% of investors maxed out their 401(k) in 2023, according to Vanguard. Th🉐ese pointers will help you decide what's next.

Maximum Limits

Maxing out a retirement account means that you've deposited the maximum amount that's allowed. If you're under the age of 50, the maximum you can contribute to a 401(k) is $23,000 in 2024 (up from $22,500 in 2023).

If you are 50 or older, you can add more money, called a 澳洲幸运5官方开奖结果体彩网:catch-up contribution, which is $7,500. In other words, if you're 50 or older, your maximum annual limit is $30,500 for 2024 (up from $30,000 in 2023).

First Step: An IRA

Contributing to an 澳洲幸运5官方开奖结果体彩网:ind💟ividual retirement account (IRA) in addition to your 401(k) is 澳洲幸运5官方开奖结果体彩网:one option. Whether you contribute to a Roth IRA or 澳洲幸运5官方开奖结果体彩网:traditional IRA, your money will grow tax-free until you retire, just as it does in your 401(k). Once you start making withdrawals, you'll pay income taxes on the money you withdraw from your traditional IRA, but not on withdrawals from your Roth IRA. This is because a Roth IRA is funded with money that has already been taxed, but a traditional IRA or 401(k) is 澳洲幸运5官方开奖结果体彩网:funded with pre-tax dollars. However, a Roth IRA doesn't give you a tax break in the year in which you make the contribution, unlike a traditional IRA.

Traditional IRA

How much of a tax advantage you'll receive when contributing to an IRA will depend on how much you earn, your filing status, and whether you or your spouse are covered by a workplace retirement plan. The 澳洲幸运5官方开奖结果体彩网:tax deduction is reduced or eliminated entirely for taxpayers who have access to a plan or a spouse's plan through work and whose income exceeds certain limits.

If you are covered by a retirement plan at work and have a modified AGI between $77,000 to $87,000 as a single person in 2024, you will either be entitled to deduct only part of your traditional IRA 澳洲幸运5官方开奖结果体彩网:contribution or not entitled to a deduction at all. (For 2023, it was between $73,000 and $83,000.) For a 澳洲幸运5官方开奖结果体彩网:married couple filing jointly and 澳洲幸运5官方开奖结果体彩网:qualified surviving spouse, it's between $123,000 and $143,000 in 20✤💛24. (For 2023, it was between $116,000 and $136,000.)

But if an IRA contributor is not covered by a workplace retirement plan and is married to someone who is covered, the deduction is phased out if the couple's income is between $230,000 and $240,000 in 2024. (For 2023, it was between $218,000 and $228,000.)

Roth IRA

You may be able to contribute to a Roth IRA. However, as a reminder, your contribution won't be tax-deductible. On the upside, when you start taking 澳洲幸运5官方开奖结果体彩网:distributions during retirement, all the money contributed after tax will be tax-free when it is withdrawn, as long as you are 59½ or older and it's been five years since you first contributed to the account.

The income phase-out range for singles is $146,000 to $161,000 for 2024. (For 2023, it was $138,000 to $153,000.) For married couples filing jointly, the Roth income phase-out range for 2024 is $230,000 to $240,000. (For 2023, it was $218,00 to $228,000.)

Next Steps: Strategic Investments

Let's say you have also maxed out your IRA options—or have decided you'd rather invest your extra savings in a different way.

Although t🌺here is no magic formula, careful planning can come close. "Look at the options in terms of investme📖nt products and investment strategies," says and principal at in Tempe, Arizona. Here are some non-IRA options to consider as well.

Low-Risk Options

The options below are for those investors who need a reliable stream of income from their retirement accounts꧂. These options will never sho𓄧w outstanding growth, but they are classic choices due to their predictable nature.

1. Municipal Bonds

A 澳洲幸运5官方开奖结果体彩网:municipal bond is a security sold by a town, city, state, county, or other local authority to finance projects for the public good, like schools, highways, and hospitals. The bond investor essentially lends the purchase price to the government entity 澳洲幸运5官方开奖结🦩果体彩网:💜in return for a specified amount of interest.

The principal is returned to the purchaser on the bond's maturity date. "The nice thing about municipal bonds," Klein explains, "is that they are liquid. You always have the opportunity to sell them, or to hold them to𓆉 maturity and collect your principal back."

Another advantage is that the interest income earned along the way is 澳洲幸运5官方开奖结果体彩网:exempt from federal taxes, and in some cases, from state and local taxes, as well. Taxable-income municipal bonds do exist, however, so check out that aspect before you invest. If you sell the bonds for a profit before they mature, you may pay 澳洲幸运5官方开奖结果体彩网:capital gains tax as well.

Be sure to check out the bond's rating. It should be BBB or above to be considered a conservative option.

2. Fixed Index Annuities

A fixed index or 澳洲幸运5官方开奖结果体彩网:indexed annuity is issued by an insurance company. The purchaser invests a given amount of money to be paid back in designated amounts at regular intervals later. The annuity's performance is linked to an 澳洲幸运5官方开奖结果体彩网:equity index (such as the S&P 500). The issu🅘er guarantees the original investment against downward market fluctuations along with growth potential. According to Klein, the returns are generally a little better than those o♐ffered by non-indexed annuities.

Fixed index annuities are a conservative investment option, often compared to 澳洲幸运5官方开奖结果体彩网:certificates of deposit (CDs) in terms of risk. The annuity's💧 earnings are tax-deferred until the owner reaches retirement age.

The downside is that annuities are rather illiquid. "You sometimes have to pay a penalty if y🅠ou withdraw the funds prior to age 59½ or if you don't take them as an income stream," cautions Klein.

Even if you avoid the penalty, by moving the funds, you might be subject to the insurance company's 澳洲幸运5官方开奖结果体彩网:surrender charges.

3. Universal Life Insurance

A 澳洲幸运5官方开奖结果体彩网:universal life insurance policy, a type of permanent life insurance, is both an insurance policy and an༒ investment.𒆙 The insurer pays a predetermined amount when the policyholder dies. In the meantime, the policy accumulates cash value. The policyholder can withdraw or borrow from the account while alive, and in some cases will earn dividends.

Not everyone is a fan of using life insurance to build up cash value. But if structured and used correctly, this type of policy offers tax advantages to the insured. Contributions grow at a 澳洲幸运5官方开奖结果体彩网:tax-deferred rate, and the policyholder has access to the capital in the me🃏antime.

"The good news is that you do have access to the funds prior to age 59½ without penalty if you use it correctly," says Klein. "Through the use of policy loans, you may be able to take money out without paying taxes and put the money back in without paying taxes, as long as the life insurance policy is kept in force."

The owner must pay tax on gains if the policy is canceled.

Riskier Options

There are some directions you can take if you still have a solid income or are expecting a windfall in the n🙈ear future. Although these are not the most traditional options, they are worth discussing with your retirement planning professional.

1. Variable Annuities

A 澳洲幸运5官方开奖结果体彩网:variable annuity is a contract between the purchaser and an insurance company. The purchaser makes either a single pa🌼yment or a 🎀series of payments, and the insurer agrees to make periodic payments to the purchaser. The periodic payments can start immediately or in the future.

A variable annuity allows the investor to allocate portions of the funds to different asset options, such as stocks, bonds, and 澳洲幸运5官方开奖结果体彩网:mutual funds. So, while a minimum 💎return is usually guaranteed, the payments fluctuate depending on the portfolio's performance.

Variable annuities offer several advantages. Tax payments on income and gains are deferred to age 59½. The periodic payments can be set up to last for the rest of the investor's life, offering protection against the possibility that the investor will outlive their retirement savings. These annuities also come with a 澳洲幸运5官方开奖结果体彩网:death benefit, guaranteeing that the purchaser's 澳洲幸运5官方开奖结果体彩网:beneficiary payment will equꦑal the guaranteed minimum or the amo😼unt in the account, whichever is greater. Contributions are tax-deferred until withdrawn as income.

Early withdrawals are subject to surrender charges. Variable annuities also 澳洲幸运5官方♎开奖结果体彩网:come with various other fe🌳es and charges that can eat into the potential earnings. In retirement, gains will be taxed at the income tax rate, not the lower capital gains rate.

2. Variable Universal Life

澳洲幸运5官方开奖结果体彩网:Variable universal life insurance is similar to item three in the preceding section. It's a hybrid of universal and variable life insurance, which allows you to participate in various types of investment options while your earnings grow on a tax-deferred basis. The cash value of your policy is invested in separate accounts (similar to mutual funds, 澳洲幸运5官方开奖结果体彩网:money market funds, and bond funds). Their performance fluctuates.

More gain, possibly—but more pain, too. If the stock market falls, "those assets can fall to a value of zero, and you do risk the possibility of losing the insurance in that case," Klein warns. "But if you need life insurance and have the ability to take on the risk of investing in the stock market, that may be an option."

Variable universal life insurance is a complex instrument, so it is 澳洲幸运5官方开奖结果体彩网:wise to study up before proceeding.

Other Strategic Moves

Alternative Investment Products

Some alternative products are highly sought after because of the potential for higher distributions. They include oil and gas investments "because of the tax deductions you'll get for participating," Klein says.

Also, certain types of non-traded 澳洲幸运5官方开奖结果体彩网:real estate investment trusts (REITs) are desirable because only a portion of distributions are taxable. However, "澳洲幸运5官方开奖结果体彩网:non-traded products often carry some complex🍃ity and can be very illiquid," Klein cautions.🍒

Real Estate

Some investors like to invest in individual real estate holdings. "One of the great things about owning individual real estate is the ability to do 澳洲幸运5官方开奖结果体彩网:Section 1031 exchanges," Klein says.

In other words, you can sell the property and roll the money into new real estate without having to recognize the gains for tax purposes (until you liquidate all of the property).

Individual Holdings

Another strategy is to buy individual holdings, such as stocks, bonds, and in some cases, 澳洲幸运5官方开奖结果体彩网:exchange traded funds (ETFs).

"As you hold those investments, you do not have to pay tax on the gains until you actually liquidate or sell those holdings," Klein explains. Mutual funds, by contrast, are subject to taxes on the gains as you earn them.

Investing in a Business

"An e♋mployee who has maxed out their 401(k) might want to consider investing in a business," says Kirk Chisholm, wealth manager at in Lexington, Massachusetts. "Many businesses, such as real estate, have g൲enerous tax benefits. On top of these tax benefits, business owners can decide what type of retirement plan they want to create. If, for example, they wanted to set up a 401(k) plan for their company, they would be able to expand their 401(k) contributions beyond what they may have at their employer."

Pensions

Building on the previous idea, some business owners will want to consider creating a pension plan or 澳洲幸运5官方开奖结果体彩网:defined-benefit plan beyond any 401(k) their company may offer. Large companies have moved away from pensio👍n plans because of the high cost, but these plans can work well for some smaller business owners, especially those who are successful🦹 and over the age of 40.

"These business owners can defer additional money from taxes into their retirement by using a pension plan for themselves or key employees in addition to a 401(k) plan," Klein notes.

HSAs

Another option for those willing to risk a high-deductible health plan (HDHP) is to fund a 澳洲幸运5官方开奖结果体彩网:health savings account (HSA).

"One option we have been exploring lately with our clients is the availability of HSAs," says David S. Hunter, CFP of in Asheville, North Carolina. "If they qualify, there are potentially more tax benefits for those contributions than a 401(k) might have. Also, there is no earned-income 澳洲幸运5官方开奖结果体彩网:phase-out for contributions. 澳洲幸运5官方开奖结果体彩网:HSAs have many benefits, such as deductibility, income deferral, and tax-free distributions, which for an increasing number of savers equals a very handy 澳洲幸运5官方开奖结果体彩网:retirement savings tool."

After-Tax 401(k) Contributions

You can also see whether your company's 401(k) allows you to make after-tax contributions to your 401(k) up to the legal limit of combined employer/employee contributions.

"Most employers don't allow after-tax contributions, but if your plan allows it, it can be very beneficial," says , of in Plano, Texas. "Earnings on your after-tax savings grow tax-deferred and, once you separate from service, you can roll what you⛦ contributed on an after-tax basis to your 401(k) into a Roth IRA. The growth on those after-tax dollars would need to be rolled to a traditional IRA."

The Bottom Line

All of these investment options come with varying degrees of complexity, liquidity, and risk. But they prove that yes, there are tax-advantaged ways to save for retirement after the 401(k). There are many ways to max out your savings, so careful planners would be wise to 澳洲幸运5官方开奖结果体彩网:consider as many methods as it makes seღnse to achieve their goals.