How to grow your savings beyond the 401(k)
Putting money away every day—that's the first step. Let's make the next step as easy as possible: deciding where to stash your savings. Here's a guide for a few places to put your hard-earned dollars, whatever your situation, to help you prepare for a long, happy future.
Take advantage of IRA savings
In 2021, you can contribute up to:
$6,000 if you're under age 50
$7,000 if you're age 50 or older
Traditional IRAs offer up-front tax breaks, if you meet certain income eligibility requirements.2 Earnings can grow tax-deferred, but you pay taxes on withdrawals and required minimum distributions (RMDs). RMDs are required at age 72.3 Roth IRA contributions are after tax but earnings and withdrawals are free from federal tax, provided certain conditions are met.4
Saving without a workplace account
No 401(k)? No problem. Freelancers, entrepreneurs, and small-business owners still have tax-advantaged ways to save. Alternatives to the traditional 401(k) include SEP IRA, SIMPLE IRA, HSA, or Self-Employed 401(k). You'll need to decide what you value most: maximizing contributions or ease of administration.
Making your old accounts work harder
You've got 4 basic options for an old workplace account: Keep it with your old employer, roll over the money into an IRA, roll over into a new employer's plan, or cash out. Learn about rollover IRAs and other choices for your old 401(k) when you retire or change jobs. Be sure to consider all your available options and the applicable fees and features of each before moving your retirement assets.