Where should you put extra cash after maxing out your 401(k)? If you’re looking for ways to invest after your 401(k) or 403(b) at work, you likely have three options: a brokerage account, IRA, or Roth IRA. For high earners, retirement accounts aren’t typically going to be enough to fully fund your desired retirement lifestyle.
Key takeaway: For individuals with a high income and significant excess cash flow, a brokerage account is usually the best place to invest after maxing out your 401(k) or other employer retirement plan.
Where to Save After Your 401(k): 3 Investment Options
- A brokerage account (taxable investment account)
- Traditional IRA (pre-tax retirement account)
- Roth IRA (subject to income limits; after-tax/tax-free retirement savings)
Comparing Account Options
The investment options after maxing out your 401(k) have varying tax advantages. Here’s how an IRA compares to a Roth IRA, brokerage account, and employer retirement plan.
Brokerage Account (Taxable Account): Usually the Best Option
A brokerage account is a fully flexible way to invest extra cash. With no income restrictions or funding limits, a taxable account is usually key for a high-income retirement. Unlike retirement accounts, assets in a brokerage account can be used for any purpose at any time without early withdrawal penalties. Capital gains tax rates are typically lower than regular income tax rates, too.
A brokerage account is also a great vehicle to fund an early retirement. Taxable account savings is often key to bridge the gap before penalty-free distributions from 401(k)s or IRAs begin.
Key Benefits
- No contribution limit
- Flexibility to use the money when you want without penalties
- Potential to benefit from more favorable long-term capital gains tax rates
- No required minimum distributions in retirement
- Tax-efficient way to leave a legacy due to the step-up in cost basis
- More options for income tax planning in retirement
Main Drawbacks
- No tax deduction for contributions
- Account does not grow tax-deferred
Tax Treatment
You make contributions to a brokerage account with after-tax dollars, so there is no tax deduction. Dividends, interest, or capital gains distributions from mutual funds and ETFs received during the year are taxable annually. Taxes can be a factor even if you don’t sell funds and elect dividend reinvestment.
When you sell a fund in your account, there will usually be a capital gain or loss depending on your purchase price and cost basis which will be taxable in the current year. This article has more on how a brokerage account is taxed.
Tax Diversification in Retirement
If you only have assets in tax-deferred accounts, you may have fewer tax planning options in retirement. Tax-deductible contributions means distributions in retirement are taxable as regular income. If taxable or tax-free assets are available, you could consider other planning opportunities as your situation changes each year.
When assisting clients with retirement planning, we’ll look to optimize the withdrawal strategy. Perhaps blending withdrawals from different types of accounts or choosing tax-deferred assets in lower tax years. This also includes pre-planning for a RMD tax cliff, managing legacy goals, considering annual Roth conversions, and so forth.
The tax code is always subject to change and tax diversification provides added flexibility. Using different tax vehicles also helps reduce the risk that unfavorable changes to tax laws pertaining to one type of account will impact your whole financial plan.
Traditional IRA
Putting extra money in an IRA after maxing out a 401(k) is another option. Anyone can make contributions to a traditional IRA up to the lesser of their earned income or the annual contribution limit. Whether you can make a tax deductible contribution depends on if you’re covered by a retirement plan at work, your income, and tax filing status. See 2026 limits to determine whether you’re eligible.
Though it’s possible to make an after-tax contribution to an IRA, there are several big drawbacks that make this strategy less advantageous. Investors sometimes doesn’t realize they’re responsible for tracking non-deductible contributions, not the IRS or a financial institution. In practice, few do, and the result is double-taxation.
Key Benefits
- Anyone can make contributions to a traditional IRA up to the lesser of their earned income or the annual contribution limit
- Potential tax deduction
- Tax-deferred growth
Main Drawbacks
- The income limits to deduct IRA contributions when you have an employer plan are low. Making non-deductible IRA contributions often means paying tax twice
- No tax diversity for planning in retirement
- Advanced planning is required to take money out before age 59 1/2 without taxes and penalties
- Annual contribution limits are much smaller than a 401(k), so the contribution to a high-income retirement may be limited
Roth IRA
A Roth IRA can be a great option to save for retirement after a 401(k) for those who are eligible. The tax treatment of Roth IRAs are unique in the investing world. If it’s been at least 5 years since your first contribution and you’re age 59 1/2 or older, withdrawals are tax-free. However, it’s worth noting there are several penalty exceptions to the age and five-year holding period requirements. And even if they apply, only the investment growth portion of the account is subject to taxes or penalties.
Otherwise, a Roth IRA shares features of both a brokerage account and an IRA. Like a brokerage account, contributions are after-tax and there are no RMDs in retirement. Like an IRA, investments grow tax-deferred and early withdrawal penalties may apply before age 59 1/2.
Income limitations apply which preclude wealthier individuals from making regular contributions to a Roth IRA. See 2026 limits to determine whether you’re eligible. If you earn too much, consider a backdoor or mega backdoor Roth.
Key Benefits
- Tax-deferred growth
- Tax-free withdrawals if 5-year holding period is met and you are 59 1/2 or older
- Another lever to reduce income taxes in retirement
Main Drawbacks
- Not everyone is eligible due to income limits which exclude many high-earners
- Early withdrawals subject to possible penalties
- After-tax contributions
- Annual contribution limits don’t provide a meaningful opportunity to save and invest
- If Roth assets are small relative to your entire portfolio, tax benefits and planning opportunities may be marginal
Why High Earners Over 50 May Not Want to Max Out a 401(k)
Thanks to new tax rules, 401(k) tax savings aren’t as good as they use to be for some. Beginning in 2026, age and income-based limits will prevent some taxpayers from making pre-tax catch-up contributions. Although they can still max out their employer plan, those impacted will have to do so after tax in a Roth account.
The new mandatory Roth 401(k) contribution rules will apply to individuals who satisfy both the following criteria:
- Age: If you will be age 50 or older on December 31, 2026
- Earnings: Your FICA wages in 2025 were greater than $150,000 for the same employer as your current 401(k) (the wage limit will be indexed by inflation annually in future years)
The limits apply to both the regular 50+ catch-up and the special catch-up contributions. For employees aged 50 to 59 and 64 and older, the 2026 catch-up limit is $8,000. The special catch-up contribution, $11,250 in 2026, is only for individuals aged 60 to 63. All age-based rules are determined by the participant’s age at the end of the year, not January 1st.
Where to Invest Money After Maxing Out a 401(k)
If you have extra income and the ability to put more money towards increasing your savings rate, you should. Even though there’s no tax break for funding taxable accounts, the flexibility it offers investors, particularly high earners, is incredibly valuable. Most savers don’t have definitive financial goals and objectives change over time. Having the ability to use money at any time for any purpose, or not making withdrawals at all, are key reasons to consider a taxable investment account after maxing out a 401(k).
[Last reviewed May 2026]
