So you’ve reached the point where your 401(k) is maxed out, but you have more money you want to put away for your retirement.  Now is the time to consider other savings options to keep your money safe and allow it to grow at the same time.  Many factors such as your income, tax bracket, and how close you are to retirement will affect which one is most beneficial for you.

Traditional IRA

One option is a traditional IRA.  Your money will earn money, and you won’t pay taxes on it until you retire; this is especially nice because your income will be lower, placing you in a lower tax bracket.  It’s also tax-deductible until you withdraw, and there is no income limit to qualify.  You need to be careful here, though, as there is a 10% tax penalty for early withdrawal, and your spouse’s income or employer-provided 401(k) may affect your eligibility and/or your contribution limit.

Nondeductible IRA

A nondeductible IRA can be a good option if you are not going to be retiring soon but you have maxed out your 401(k) and do not qualify for a traditional IRA.  This one is not tax-deductible since you contribute after-tax money, but just like a traditional IRA, it is taxed as though it was ordinary income rather than other types of savings gains, and you won’t have to pay until it’s time to withdraw.

Roth IRA

A Roth IRA is a good choice if you are still working with no plans to retire soon.  This one is also not tax-deductible, but it is essentially tax-free.  You can start to withdraw money five years after opening the account without an early withdrawal penalty, but there is an income limit in order to qualify for this one.  If you file taxes as single, your income limit is $95,000.  Couples must make less than $150,000 combined.

Pay Off Debt

This one is always a good option.  If you’ve maxed out your 401(k) but have quite a bundle of debt, you’ll want to pay it off before you retire and are living on a lower income.  You can use all of your extra money that would be going into your 401(k) for your debt, or find a balance between this and depositing money into an IRA.

Other options include regular savings (which won’t net you as much gain), mutual funds, variable annuities, etc.  There is some debate over whether variable annuities are beneficial due to annual fees, contract fees, and the potential for loss, so if you’re considering this one, do some research and try to stick to annuities with low fees.