Many people with access to a 401(k) plan through an employer struggle to max it out. That's because the annual contribution limits for 401(k)s are pretty high: $19,000 for workers under 50, and $25,000 for those 50 and older. But if you're a higher earner, or lead an extremely frugal lifestyle, you might manage to eke out more than $19,000 or $25,000 in annual savings. The question is: Where should you put that cash once it can no longer go into a 401(k)?

1. An HSA

An HSA, or health savings account, is a hybrid savings and investment account that lets you set aside funds to be used to cover healthcare expenses in retirement (and during your working years). The money you contribute goes in tax-free, at which point you can invest it and enjoy tax-free growth on it. Then, your withdrawals are also tax-free, provided they're used to pay for qualified medical expenses.

A clock, three stacks of coins increasing in height, and a glass jar of coins labeled retirement.


To be eligible for an HSA, you must be enrolled in a high-deductible health insurance plan, defined as $1,350 or more for single coverage and $2,700 or more for family coverage. Though the annual contribution limits for HSAs change from year to year, currently they're $3,500 for single coverage and $7,000 for family coverage. Those 55 and over get a $1,000 catch-up as well.

Now, the drawback of HSAs is that you're effectively forced to use that money on healthcare expenses or otherwise risk a 20% penalty for withdrawing funds for nonmedical purposes. Once you turn 65, however, you can use your HSA for any reason, and the worst that'll happen is that you'll be taxed on withdrawals that aren't used for qualified medical expenses. But chances are, you'll need that money for healthcare in retirement anyway, in which case saving your excess cash in an HSA is a smart idea, especially since you get the same tax break for contributing as you would for a traditional 401(k).

2. A traditional (non-tax-advantaged) brokerage account

The downside of putting money into a traditional brokerage account is that you won't get a tax break out of it, and that you'll be liable for taxes on your investment gains year after year. The upside? You'll have the opportunity to use that money for whatever purpose you'd like. You can save all of it for retirement, or you can earmark much of it for your golden years but also access that cash for other needs or wants that pop up along the way, like home improvements, vacations, or your kids' college tuition bills.

3. An annuity

An annuity is a contract between you and an insurance company. In exchange for a lump sum up front, the issuer of your annuity agrees to pay you a certain amount of money -- either a lump sum in the future or a series of payments over time. Because annuities are complex and can sometimes come with costly fees, they're often regarded as a last-resort option for retirement savings, especially since there's no tax break involved in funding one. But if you're looking for another dedicated source of retirement income and you've already maxed out your 401(k), an annuity is something worth considering.

If you're fortunate enough to be in a position where you've maxed out a 401(k) and still have money to save, it pays to put that cash to good use. HSAs, traditional brokerage accounts, and annuities are all reasonable options for socking away extra funds to use in retirement one way or another.