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Maxed Out Your 401(k)? Where the Next Dollar Can Go

You already did the part most people put off. Here is what the IRS caps, and where the next dollar can go once the 401(k) is full.

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You already did the part most people put off. The full amount goes into your 401(k) every year, and you still have money to save. So where does the next dollar go?

What the IRS caps for 2026

  • Your 401(k): $24,500 of your own pay. At 50 or older you can add $8,000 more. From 60 to 63 the extra is $11,250 instead.
  • An IRA: $7,500 a year. A Roth IRA closes as income rises. The room shrinks between $153,000 and $168,000 for a single filer, and between $242,000 and $252,000 for a married couple filing together.
  • Catch-up for higher earners: if your wages last year were over $150,000, your catch-up money goes in as Roth.

Source: IRS Notice 2025-67. Once those are full, most of the tax-advantaged room the IRS gives a W-2 earner is used up.

Where the next dollar usually goes

A regular brokerage account. No ceiling and no penalty to reach it. Growth and dividends are taxed along the way, and gains are taxed when you sell.

A properly structured indexed universal life policy. Protection first, with money you can reach along the way. It has no IRS contribution ceiling of the 401(k) kind. What you can put in is set by the policy design and by the tax rules that keep it a life insurance policy.

What an IUL adds once the 401(k) is full

  • A death benefit from day one, paid to your family outside probate.
  • A floor under a down year. The account is credited on a blend of stock indices. In a down year the credit is floored at 0.75% instead of going negative. The floor is guaranteed. The participation rate is current, and the insurance company can change it.
  • Money you can reach at any age. Policy loans carry no early withdrawal penalty and no required distributions.
  • A different tax shape. Dollars go in after tax. Access can reach you without an income tax bill when the policy is structured properly, stays out of modified endowment status, and does not lapse with a loan outstanding.

The costs are real and heaviest early: a 4% premium load on each deposit, a $10 monthly policy fee, the cost of insurance, and a 0.72% index account charge. Surrender charges run off over 15 years. That is why it is a plan for five to seven years or longer.

Who this fits

  • You put in the full 401(k) amount and still have money left each month.
  • Your emergency fund is in place.
  • You can fund a policy for five to seven years or longer without strain. Most clients fund between $150 and $1,000 a month.
  • You want protection for your family and money you can reach before retirement, in the same place.

What we do with this

We educate, clarify and align the strategy with your goals, and we write the coverage that fits. Bring your 401(k) statement to a strategy session, and we will run the numbers for your own situation.

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Where to go from here

Three free steps, in order, and a person when you want one.

  1. 1. Read thisThe Leaky BucketWhy doing everything right still feels like you are one emergency away.
  2. 2. Then score yourselfThe Waterfall Wealth AssessmentTwenty-five questions across the five pillars, in about five minutes.
  3. 3. Then get the orderThe Waterfall Wealth Creation BlueprintTen practical steps, in the only order that works.
  4. If you want to sit down with somebodyThirty minutes, free, by video or phone. We will look at your actual situation and tell you the truth about it.Book a strategy session