You may have heard people over the years say “I’m maxing out my [401(k)/IRA/other retirement account]!” But what does that actually mean? In this post I am going to break it down.
“Maxing out” means you’re contributing the maximum amount to your 401(k). In 2022 that amount is $20,500. This max does not include employer match contributions. For IRAs the maximum contribution amount in 2022 is $6,000 and that is to either a Roth IRA or a traditional IRA.
Ideally, you would max out your 401(k) ($20,500), then max out an IRA ($6,000), then open a brokerage account (no maximum).
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