Have you maxed out your IRA? 3 places you can still save for retirement in 2024

IRAs are one of the most popular options for retirement savings because they give you so much flexibility. You can choose how you want to invest your funds and even when you want to pay taxes on them. But they have a big downside: You can only contribute up to $7,000 in 2024 ($8,000 if you’re over 50), and that’s not enough for all employees.

If you’ve already maxed out your IRA and want to put more money aside for retirement this year, you still have options. Here are three to consider.

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1. 401(k)

A 401(k) is a great alternative if you have access to one through an employer. It has a much higher contribution limit — $23,000 in 2024 or $30,500 for adults 50 and older. Along with an IRA, this should be enough for most people. You may also have the opportunity to earn a matching contribution from your employer, which can help your savings grow faster.

But 401(k)s are more limiting in some ways than IRAs. First, you have fewer investment options. You usually have to choose from a variety of employer-selected mutual funds. Some companies also limit you to just a tax-deferred 401(k), which gives you a tax break now but forces you to pay taxes on your withdrawals later. However, a growing number of companies offer a Roth 401(k) option for those who prefer to pay taxes now to get tax-free retirement withdrawals later.

Finally, you can only make 401(k) contributions through salary deferrals. You must make all 401(k) contributions for 2024 by December 31st. This is different from IRAs, which allow you to make contributions for 2024 up until the April 15, 2025 tax deadline.

2. Health Savings Account (HSA)

A health savings account (HSA) might be an option for you if you have a high-deductible health insurance plan. This is one with a deductible of $1,600 or more for an individual or $3,200 or more for a family in 2024.

Individuals who qualify can put away up to $4,150 if they have an individual health insurance plan or $8,300 if they have a family plan. Adults 55 and older can add another $1,000 to these limits. Contributions reduce your taxable income and are tax-free when withdrawn for medical expenses at any age. You can also take non-medical withdrawals, though you’ll pay income taxes on those, plus a 20% penalty if you’re under 65.

An HSA is a powerful choice for those looking to set aside money for retirement health care expenses. However, if you plan to use the account this way, you probably want to avoid medical withdrawals before retirement. You also want to make sure you invest your HSA funds. Otherwise, they will not grow very quickly.

3. Taxable brokerage account

Taxable brokerage accounts are not retirement accounts, and therein lies their strength and weakness. Contributing to one of these accounts will not give you the same tax breaks as contributing to an IRA. However, if you hold your investments for a year or more before selling them, your gains will be subject to long-term capital gains tax. This can save you a few dollars compared to paying higher short-term capital gains tax rates.

The advantage of using a taxable brokerage account is that there are virtually no contribution and withdrawal limits. You can invest whenever you want whenever you want and withdraw them without the 10% early withdrawal penalty that retirement accounts have while you’re under 59 1/2. In addition, you can invest your money however you want.

You can also split your money between two or more of these three options, if you’re eligible for them. Weigh the pros and cons of each and choose the ones that make the most sense for you right now. If you want, you can even start thinking about your 2025 strategy so that you are ready to execute it once the new year arrives.