Where Do I Invest After I’ve Maxed Out My 401(k)?

If you max out your 401(k) every year, you’re making huge strides in building wealth for your future. Congrats! Since you’re such a go-getter, you’re probably looking for other ways to continue investing beyond your employer-sponsored retirement plan.

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The good news is that you don’t have to stop investing when you max out your 401(k). You still have options that can put even more of your money to work for your future! Let’s explore a few.

1. Invest through a traditional or Roth IRA.

The first place you should invest once you’ve maxed out your workplace retirement plan is an individual retirement account (IRA). This is a powerful tool that lets you invest for retirement beyond what your workplace plan allows.

Wait—you can put money into a traditional or Roth IRA and your 401(k) at the same time? You bet! For 2025, you can invest up to $7,000 per year in an IRA ($8,000 if you’re 50 or older).¹

With a traditional IRA, you’ll likely be able to deduct the full amount of your contributions—which means you’ll pay less in income taxes this year. However, you will have to pay taxes when you withdraw that money in retirement—and you never know what tax bracket and tax rate you’ll be looking at by then (there’s a risk).

If you’d rather not have to worry about paying taxes in your golden years, you can opt for a Roth IRA and get the taxes out of the way when you make your contributions. However, the IRS has income limits for Roth plan contributions:

• For 2025, you can contribute up to the maximum amount if your gross income is less than $150,000 for single and head of household filers or less than $236,000 for married couples filing jointly.
• If you earn between $150,000 and $165,000 ($236,000 and $246,000 for married couples), you’re only allowed to make a reduced contribution.
• Once your income rises above $165,000 ($246,000 for married couples), you’re not allowed to make any contributions to a Roth IRA.²

Roth IRA Advantages

Limits aside, we’re big fans of the Roth IRA, and for lots of good reasons:

• Tax-Free Growth: Roth contributions are made with after-tax dollars, which means the money in your account grows tax-free. You also get tax-free withdrawals in retirement. And unlike the traditional IRA (which requires withdrawals starting at age 73), there are no required minimum distributions (RMDs) for Roth plans.³ 
• No Age Restriction: With the Roth IRA, there’s no age restriction on your contributions. You can keep contributing to your Roth IRA if you choose to work past retirement age, as long as your income still falls within the above limits.
• Control Your Legacy: Finally, you can also pick your beneficiaries, which means you get to say who inherits your Roth IRA. And they can use that money tax-free too—as long as the account is at least five years old.

Why This Option Matters

If you’ve maxed out your 401(k), you’re saving a lot for retirement already. Adding an IRA to the mix allows you to save and invest even more for the future. Plus, the younger you are, the more compound interest will reward you in retirement. And if you can invest in a Roth IRA, you get the taxes out of the way, which is always a win.

2. Open a brokerage account.

Okay, so you’ve maxed out your 401(k), and now you’ve maxed out your IRA. Does that mean you’re done? Not so fast!

If you want to invest even more, you can open a brokerage account—also known as a taxable investment account—with an investment management company or brokerage firm. 

You won’t get a tax break from Uncle Sam with a brokerage account, so only invest here once you’ve maxed out your tax-advantaged options (like your 401(k) and Roth IRA). But hey—this option is still way better than letting your money gather dust in a savings account (or under the mattress)! Here are some of the biggest advantages of brokerage investments:

• No required minimum distributions (RMDs): With a 401(k) or traditional IRA, you have to start taking money out once you reach a certain age. Not so with a brokerage account.
• No income limits: You can invest in a brokerage account even if you make a lot of money. No IRS income limits here.
• No contribution limits: You can invest as much as you want.
• More flexibility: You can take money out of the account at any time and for any reason without having to worry about early withdrawal penalties.

The downside of a taxable investment account is—you guessed it—taxes. The money you invest is subject to income taxes (because this isn’t a tax-advantaged account), and you’ll pay capital gains taxes whenever growth on those investments is realized (when you sell an investment for a profit). This is the government we’re talking about, and Uncle Sam always gets his share.

We strongly recommend working with a financial advisor who can give you guidance on the pros and cons of opening a brokerage account.

Why This Option Matters

The brokerage account option isn’t about minimizing tax exposure—it’s about investing for the future. Since there are no limits on income, contributions or withdrawals, these accounts offer lots of flexibility and are an attractive option once you’ve maxed out your 401(k). If you put your money to work for you in a brokerage account, it has a lot of room to grow.

 Ramsey Solutions is a paid, non-client promoter of participating pros. 

3. Invest in real estate.

Whether you’re thinking of flipping houses or buying a rental property, investing in real estate is a great way to make money after maxing out your retirement accounts—and it helps diversify your investments.

But if, after watching a few fixer-upper reality shows or TikTok videos, you think you’re ready to build your own real estate empire overnight, you’re in for a rude awakening. Buying and managing rental properties takes a lot of expertise, time, hard work and—oh yeah—money. You should know what you’re getting into before diving in.

Follow these guidelines if you want to invest in real estate the right way (and not turn the dream into a nightmare):

• Pay off your mortgage first. Owning your personal residence free and clear takes a lot of risk off the table. And it gives you more money (and focus!) to put toward that investment property. Imagine the wealth you could build by investing a house payment every month.
• Pay cash. Never go into debt to buy a rental property. Remember, debt always equals risk—and you’ll sleep better at night knowing 100% of your investment property belongs to you.  
• Stay local. When you don’t live near your real estate investments, it’s much more difficult to keep tabs on them.
• Prepare for problems. Make sure you have a separate emergency fund specifically for your investment property so you can cash flow any taxes, repairs or other maintenance issues that pop up.
• Work with a real estate agent. Finding a pro you can trust is essential. They can help you find the right properties and navigate the challenges you’ll encounter as a real estate investor.

Real estate is a long-term play. Your investment will grow as the value of your property increases over time—especially if you buy at a low price, ride out any downturns in the market, and sell when the value has gone up.

If you reinvest your profits into another similar property within a certain period of time, a 1031 exchange allows you to avoid paying capital gains tax.

Most investors buy property for the steady income stream that comes with renting it out. Once you get a quality renter, your property will generate monthly rental income. But just keep in mind that HVAC systems break down and garbage disposals quit working—so you’ll either pay a property management company for repairs and maintenance or handle those things yourself.

Why This Option Matters

If you enjoy finding fixer-uppers and improving them, real estate could be super fun and rewarding. Just remember, it does require a unique skill set that’s way different from any other kind of investment. Also, it’s hard work. But if you do it right, the results could be extremely fulfilling—as long as you’re wired for it.

4. Take advantage of your HSA.

Believe it or not, your Health Savings Account (HSA) could actually be a secret weapon to help you save more for retirement.

HSAs are tax-advantaged savings accounts that are paired with a high-deductible health plan (HDHP). (If you don’t have an HDHP, you won’t be able to contribute to an HSA.)

While HSAs are designed first and foremost to help you pay for medical expenses, they can also help you save a little extra for retirement. For 2025, individuals can save up to $4,300 in their HSAs (those with family coverage can contribute up to $8,550).⁴

The best thing about HSAs is that they come with a triple tax advantage:

• The money you contribute goes in tax-free.
• Those contributions grow tax-free.
• As long as you take money out to pay for qualified medical expenses, you won’t pay taxes on withdrawals.

On top of that tax-advantaged triple threat, once you’re 65 years old, your HSA basically becomes a traditional IRA. That means you can take out money for anything you want! But just like you would with a traditional IRA, you’ll pay taxes on it when you do.

Your HSA provider will give you several investment options to choose from. Keep it simple and spread your investments across four types of good growth stock mutual funds: growth, growth and income, aggressive growth and international.

Why This Option Matters

As long as you have an HDHP, there’s basically no good reason not to put this investment option to work for you. You can use HSA funds for more than you might think, but there are limits.⁵

5. Invest in your kids’ college fund.

Because of some recent developments the SECURE 2.0 act, it’s pretty easy to invest in your kids’ (or grandkids’) future by providing them the means to get a great education.

Generally, you can save as much as you want for their college expenses through a 529 plan (there are no federal contribution limits). But since 529 plan contributions are considered gifts, for 2025, individuals can only contribute up to $19,000 per child before having to pay a gift tax (if you’re married, together you can put $38,000 in your child’s 529 plan without triggering a gift tax bill).⁶

The 529 plan is a great way to save because it’s actually an investment account (so you can invest in mutual funds). Plus, all contributions are after-tax. And as long as withdrawals are used for qualified educational expenses (things like tuition, room and board, and textbooks), the student doesn’t pay taxes on this money.

But here’s where it gets even better. Thanks to the SECURE 2.0 Act, you can now roll over 529 funds to a Roth IRA. Of course, there are some limitations:

• Rollovers are subject to contribution limits, so you’re maxed at $7,000 per year ($8,000 if you’re over 50).
• There’s a lifetime cap of $35,000 per beneficiary.
• The Roth IRA must be opened in the name of the same beneficiary as the 529 plan.
• The 529 plan you’re rolling over has to be at least 15 years old, and the last contribution must have been made over five years ago.⁷

You should definitely talk with an investment pro about this option because the IRS has lots of rules for this move. But if you meet all the conditions, it’s a great way to jailbreak funds that would otherwise be trapped by the law.

Why This Option Matters

If the 529 plan you set up is overfunded (the beneficiary didn’t need all the money in the account to complete their education), the Roth IRA rollover is an escape hatch for funds that would otherwise be locked away. By rolling over these funds into a Roth IRA in the beneficiary’s name, they regain access to those investments without having to return to school. They can also avoid having to pay taxes on them and get a nice jump start for their own retirement. Talk about paying it forward!

Work With an Investment Pro

So, even after maxing out your 401(k), it's still possible to continue growing your retirement savings and investments. You have options!

But before you make any big decisions about those options, it’s a good idea to chat with both a tax advisor and an investment pro. They’ll help you navigate all those complicated government rules so you can avoid mistakes—and that’ll save you both time and money. Sounds like a win, right?

 

This article provides general guidelines about investing topics. Your situation may be unique. To discuss a plan for your situation, connect with a SmartVestor Pro. Ramsey Solutions is a paid, non-client promoter of participating Pros.