We’re Maxing Out Our 401(k)s—How Do We Invest More?

Summary

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Episode Summary: "We’re Maxing Out Our 401(k)s—How Do We Invest More?"

Podcast: Ramsey Everyday Millionaires
Hosts: Ramsey Network (Dave Ramsey featured)
Date: November 26, 2025

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Overview

In this episode, Dave Ramsey answers a listener’s question about maximizing retirement investments after maxing out traditional options like 401(k)s and IRAs. The dialogue offers actionable strategies for increasing retirement wealth, practical guidance on account conversions, and real-life math on tax implications so listeners can make informed decisions about their financial future.

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Key Discussion Points & Insights

1. Listener’s Situation: Maxing Out and Looking for More

• Ryan, the caller, is nearly 50 and already maxing out his Roth IRA and his wife's 401(k).
• He has an additional rollover IRA from a previous job and wants advice on further growth beyond current contributions.

2. Roth IRA and Contribution Limits

• Contribution Update:
  • Standard max for Ryan’s age is $7,000/year, soon to be $8,000 when he’s 50.
  • Dave Ramsey: “Yeah, you can bump it to 8,000 at 50.” (01:00)
• Spousal Roth Option:
  • A spouse can also have a Roth IRA—even if not working—but in this case, Ryan’s wife does work.
  • Dave: “You can also do a spousal Roth for your wife as well.” (00:59)

3. 401(k) Details and Ensuring Tax Efficiency

• Verify Roth vs. Traditional:
  • Clarify whether wife’s 401(k) is Roth (after-tax) or traditional (pre-tax).
  • If employer matches, the match is not Roth.
  • Dave: “Make sure. Is her 401K a Roth?... Because if they match, the portion they match is not Roth, but make sure it's not traditional.” (01:16–01:24)

4. Rollover IRA Conversion Strategy

• Roth Conversion Advantage:
  • Consider converting the $75,000 rollover IRA to a Roth IRA to enjoy future tax-free growth.
  • Tax must be paid on the amount converted, estimated at $15,000.
  • Dave: “If you convert it, it'll make the taxes on the amount come due.” (01:40)
• Growth Example:
  • “That 75 in seven years will be 150, and in seven more years will be 300, and in seven more years will be 600. And all of that will be tax free. If it's Roth, it won't be the way it is now.” (02:01–02:13)
• Tax Planning:
  • Advise talking with a tax professional before converting to anticipate and prepare for the tax bill.
  • Dave: “Talk to your tax person. Figure out what your taxes are going to be before you do it.” (02:10)

5. Path Forward for Extra Retirement Investments

• Dave's Steps for Ryan:
  • Increase annual IRA contributions to $8,000 at age 50.
  • Open a spousal Roth IRA for his wife.
  • Ensure her 401(k) is a Roth, if not already.
  • Convert the traditional rollover IRA to Roth and pay the taxes to guarantee future tax-free growth.
  • Prepare for the one-time tax payment at conversion, but view it as an additional investment in retirement.

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Notable Quotes & Memorable Moments

• Dave Ramsey (to Ryan):
  “That paying those taxes now is like investing into a retirement.” (02:06)

• Dave Ramsey:
  “If you're looking for extra ways to put money towards retirement, that's the ways you can do it.” (02:15)

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Timelines for Key Segments

• 00:16 – 00:59: Ryan describes his situation and current retirement accounts.
• 00:59 – 01:16: Dave explains Roth IRA limits, spousal IRAs, and confirms account eligibility.
• 01:24 – 01:37: Discussion about Roth vs. traditional 401(k) and rollover IRA.
• 01:40 – 02:06: Breakdown on converting the rollover to Roth, tax impacts.
• 02:06 – 02:15: Dave’s summary and encouragement for further retirement investments.

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Episode Takeaways

• Max out all available tax-advantaged retirement accounts, using catch-up contributions at 50.
• Consider a spousal Roth IRA even if your spouse has a 401(k).
• Strategically convert traditional IRAs to Roth IRAs for tax-free future growth—plan for and pay taxes upfront.
• Double-check account types (Roth vs. Traditional) for optimal long-term tax benefits.

This episode is a practical guide for anyone who has already maxed out retirement accounts and wants to push their long-term investing further, drawing on strategies that favor simplicity and tax-smart planning, in true Ramsey style.

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Transcript

[A]

This episode is brought to you by SmartVestor. Connect with an investing pro near you at RamseySolutions.com SmartVestor Ryan is in Nashville. Hi, Ryan. How are you?

[B]

Good, Dave. How you doing?

[A]

Better than I deserve. What's up?

[B]

Well, had a question about retirement and 401ks. I am new into a Roth IRA. I'll be 50 next year, and I can only contribute so much to that. And on my wife's 401k, we're maxing out what she can do a year on that. And then there's a rollover IRA from previous employment that we have. So we've got the three things working for us, but I can only contribute, you know, just that, 7,000 a year. And I would just like to know what you think, other ways for me to try to make my money work for me down the road so I can have more retirement.

[A]

Yeah, you can bump it to 8,000 at 50. And you can also do a spousal Roth for your wife as well. Are you doing both of those?

[B]

So we can do that if she has a 401k plus she has a rollover IRA?

[A]

Yes.

[B]

And what's that called? I'm sorry?

[A]

Just a Roth ira. She can just do a Roth. She can do one, too.

[B]

She can do a Roth?

[A]

Yep. Even if she's not working. She could do one, but she's working in this case. So make sure. Is her 401K a Roth?

[B]

No, I don't believe. Well, yes, it is. It is.

[A]

Okay. All right. Because if they match, the portion they match is not Roth, but make sure it's not traditional. Is the rollover raw? Is a rollover ira? Has it been converted to Roth?

[B]

I don't think it's been converted. It's just a rollover.

[A]

Okay. If you convert it, it'll make the taxes on the amount come due. What's the amount in there?

[B]

The amount on the rollover currently is probably about 75.

[A]

Okay. So you would have about 15 or $20,000 in taxes. Probably 15. So if you got an extra 15 to invest in retirement, I would roll that to a Roth and pay that 15 in taxes and call that investing. Here's why. Because from this point forward, it will grow completely tax free.

[B]

Okay.

[A]

So that paying those taxes now is like investing into a retirement. So if you're looking for more money to throw at something, the first thing is you bump them to eight. You do a spousal. Make sure her 401k is Roth, if it's not already, and then take that rollover. And, you know, talk to your tax person. Figure out what your taxes are going to be before you do it. Make sure you've got that much in extra cash to pay your tax bill next year when the April rolls around, because you're going to have an extra, whatever it is, 15 grand or so on that. And then roll that 75, because that 75 in seven years will be 150, and in seven more years will be 300, and in seven more years will Be 600. And all of that will be tax free. If it's Roth, it won't be the way it is now. It's going to grow, and all of it be taxable at ordinary income. So you do want to move that at some point. But if you're looking for extra ways to put money towards retirement, that's the ways you can do it.