Sage-Tips

What should you do after you max out your retirement and your Roth?

You can save for retirement through 401(k)s, SEP, SIMPLE IRAs, or health savings accounts if you’ve maxed out your Roth IRA contributions—as long as you’re eligible. Be sure you’ve funded your 401(k) enough to get the full employer match even before you put money in a Roth IRA.

Can I open a Roth IRA if I make over 200k?

High earners are prohibited from making Roth IRA contributions. Contributions are also off-limits if you’re filing single or head of household with an annual income of $144,000 or more in 2022, up from a $140,000 limit in 2021.

Can I have 2 Roth IRAs?

There is no limit on the number of IRAs you can have. You can even own multiples of the same kind of IRA, meaning you can have multiple Roth IRAs, SEP IRAs and traditional IRAs. You’re free to split that money between IRA types in any given year, if you want.

Why you should max out Roth IRA?

You’ll need an eligible account to max out your Roth IRA contributions. These accounts offer valuable tax advantages: Money and investment earnings grow tax-free, and there’s no income tax on withdrawals during retirement.

Did you max out your 401k or Roth IRA in October?

In October, I maxed out my 401k and Roth IRA contributions for the year. Now, my paychecks are larger because those automatic deductions are no longer happening.

What to do after maxing out your 401k and Roth IRA?

Three things to do after maxing out your 401k and Roth IRA 1. Check your emergency savings If you don’t have an easily-accessible emergency savings account with at least 6 months of living expenses, use the extra dough to build this pot of money up as fast as you can.

Should I go with a 401k or a Roth IRA?

After you receive the free employer money, then the decision whether to go with the Roth or 401k depends on several factors. An advantage of the 401k over a Roth IRA is that your contributions are tax deferred which means your taxable income is reduced by every dollar that’s paid into the 401k.

How much can you contribute to a 401(k) or IRA?

You can contribute up to $19,500 per year (with another $6,500 as a catch-up contribution for those 50 or older). Some employers even offer a Roth version of the 401 (k) with no income limits. You can also contribute up to $6,000 ($7,000 if you’re 50 or older) to a nondeductible traditional IRA.