High earners have a little-known option to boost 401(k) plan savings: It’s ‘the best place’ to save more, expert says

To live your best life in retirement, it helps to make the most contributions while you’re working.

Employees who participate in 401(k) plans can put up to $23,000 in pretax or post-tax Roth contributions in 2024.

But there’s another limit, $69,000, including employee and employer contributions, that may let workers set aside even more. If the 401(k) plan allows for it, workers may add post-tax contributions beyond the $23,000 limit for 2024 up to $69,000, provided their salary is more than that threshold.

More from Personal Finance:
More retirement savers are borrowing from their 401(k) plan
Why employers can force out small 401(k) accounts once a worker leaves a job
Job data shows two kinds of workers: the ‘haves and have nots’

That goes up to as much as $76,500 when including a $7,500 catch-up contribution for savers age 50 and older.

“If you want to save more for retirement, the best place to do it is to start with, does your plan allow for after-tax contributions?” said David Blanchett, a certified financial planner and head of retirement research at PGIM DC Solutions.

To maximize your post-tax savings, you may do an annual in-plan rollover to a Roth, he said, provided your employer offers this option.

“Then, if you wanted to save more effectively, you could then save your regular deferrals as Roth as well,” Blanchett said.

Having 100% Roth retirement savings could be a “smart move” for someone interested in maximizing retirement savings, he said.

For most people, traditional pretax contributions to retirement plans such as a 401(k) make sense because their tax rates will likely decline once they retire, Blanchett said.

However, Roth investments allow for the potential opportunity for savings by paying taxes at current rather than future rates, which tend to increase, he said.

That helps make Roth savings more valuable. When deferring 6% to traditional pretax retirement savings or 6% to post-tax…