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  • Writer's pictureNathan Zarcaro

4 Steps to Max Out Your IRA in 2023

Updated: Dec 20, 2023

It is really easy to let your retirement savings slip through the cracks, especially if you're struggling to make ends meet here in 2023. Regardless, it is really important to stay focused on the long term and your financial future.

One of the easiest ways to start saving for retirement is to open and contribute to an individual retirement account (IRA).

In this post, I will cover:

  1. What is an IRA?

  2. Should you max out your IRA?

  3. How to max out your IRA

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What is an IRA?

An IRA, or individual retirement account, is a tax-advantaged retirement savings vehicle designed to help Americans prepare for, save, and invest for their retirement. In 2022, Americans can save up to $6,000 in an IRA ($7,000 for those age 50 or older), while in 2023, these limits will move to $6,500 and $7,500, respectively.

IRA's come in two different varieties:

  1. Traditional

  2. Roth

Traditional IRAs allow you to make contributions on a pre-tax basis, meaning that you can lower your taxable income in the present. Your investment growth occurs on a tax-deferred basis, though you will owe taxes on your withdrawals come retirement time.

Roth IRAs work a little differently. With a Roth, you'll make your contributions and investments on a post-tax basis (after applicable taxes have been deducted from your paycheck). This way, your contributions, and their ultimate growth can be withdrawn tax-free in retirement! Due to this, Roth IRAs generally work better for those that expect to be in a higher tax bracket come retirement.

Who is eligible to contribute to an IRA?


Any American with earned income can open and contribute to a Traditional IRA. This provision includes stay at home spouses as well, as long as you are married and file your taxes jointly.


Roth IRAs have more rigid eligibility requirements due to their tax advantaged status (more on this in a minute).

First, you'll need to meet program income requirements. In 2023, full Roth IRA contributions can only be made by those making less than $138,000 (if filing single). Those making between $138,000-$153,000 begin to be phased out, and those earning over $153,000 annually can no longer participate.

If filing jointly, you retain Roth IRA eligibility up to $218,000 in annual income, with the phaseout period occurring for those households earning between $218,000 and $228,000.

Again, these requirements are in place due to the potential for decades of tax-free growth and withdrawals.

Should you max out your IRA?

If you can afford to do so, you likely won't regret it. But whether or not maxing out an IRA should be your main focus or not depends on a number of variables, including your age and employment status. Here's why.

If you work for a company that offers a workplace savings plan, like a 401(k), there is a chance that they offer some sort of contribution match program. If this is the case, you'll almost definitely want to contribute enough money to receive the full employer match that is offered to you.

It is free money, after all!

After taking advantage of a match, you have a couple of options.

First, you may continue investing in your 401(k). Typically, I only recommend doing this if you have a plethora of quality (and cheap!) mutual funds available for investing in your 401(k). An investment advisor can do a better job assisting you here, but that is the general rule that I follow.

Your other option is to contribute only what you need to get the match, and save any excess dollars in an IRA.

How I balance my IRA and 401(k) contributions

I like to practice what I preach. When I save and ultimately invest for my retirement, I contribute the minimum required to receive my full company match.

Next, I focus on my IRA, since the investment options are far more plentiful and I can invest in whatever I want. Finally, if/when I max out my IRA within a calendar year, I'll return to my 401(k) and begin contributing more than the minimum required to receive a match.

You should know that 401(k)s are usually funded via payroll deduction, so if you're looking to employ the same strategy as me, you'll likely need to adjust your deductions with Human Resources or payroll a couple of times per year.

How to max out your IRA

"Maxing" out an IRA, or making contributions all the way up to the IRS maximum, is no easy feat. But with some discipline, good budgeting, and a little bit of luck, you may be able to max out yours.

I have found a way to max out my Roth IRA each year since I graduated from college in 2018. And while it is not always the most fun use of a few hundred dollars at a time, I know it is something that I won't regret come retirement time.

In preparation to write this post, I thought through the methods I use to contribute the IRS maximum year in and year out. What I built is a formula for you to use too! It consists of three main components:

  1. Contributions from your work earnings

  2. Side hustle savings

  3. Any unexpected money you come across

Let's explore these components in a little more detail.

1. Contributions from your work earnings

The most common way to make IRA contributions is to establish a direct deposit from your paycheck at work. Of course, for most of us, the relatively high contribution limits on IRAs do make this strategy a little cash flow prohibitive.

Assuming you are paid biweekly, you'd have to contribute about $230 per pay period in order to max out your IRA from work earnings alone. A more manageable goal for most Americans is to try to make 50% or so of their contributions from their day job income.

2. Save some side hustle income

I also like to save a portion of any income I make from any side hustles or ventures I participate in outside of my day job. For example, I contribute a portion of any proceeds that I earn from my website or any other venture to my Roth.

Not only does that allow me to prepare for a more sound financial future, but it also allows me to keep more of my paycheck from my day job in order to spend on other expenses or wants.

3. Unexpected money you come across

The third component of our formula is to take advantage of any unexpected funds you encounter. This could be birthday money, money you find on the street, or presents of any sort. I'll never forget when I was in college and a man approached me on campus. It turns out he was a Villanova University basketball fan, the team that was taking on my Providence College Friars on that February night.

He asked me a series of questions before writing me a $100 check, explaining that he had recently retired and was trying to give back to a college student at each school that Villanova was playing that season.

You probably know where this is going. I took the $100 and used it to make a contribution to my IRA.

My point is not to tell you to find people on the street to give you $100, but rather to encourage you to think outside the box. It may not be the most fun to use the money to contribute to your retirement accounts, but your future self will thank you.


Leveraging all three parts of this formula will not only increase the odds that you max out your IRA next year, but it will also lessen the pressure on you to do so from your work earnings alone.

Other tips to max out your IRA

There is a number of other IRA tips that you'll want to be well-versed in to maximize your chances of success. Among our other pointers are:

  • Know the contribution cut-off: Typically, you have until April 15th to make prior-year IRA contributions.

  • Contribute to multiple IRAs if you are married: If you are married and can afford to increase your contributions, do keep in mind that both partners may contribute to their own accounts.

  • Make catch-up contributions if eligible: Remember, those that are age 50 or older may contribute an extra $1,000 annually. If you are financially able to, then you will absolutely want to consider it.

  • Use your prior year's tax refund: One tip that we've started to employ in recent years is to use your prior year's tax refund to begin funding your account for the current year. When you do so, you'll come up on IRS maximums much more quickly.

Should you max out your IRA?

Maxing out your IRA is never a bad idea. You will want to keep in mind whether you want to tackle your 401(k) or IRA first based on my pointers above. But if you're taking advantage of any employer match and have the funds to contribute to an Individual Retirement Account, then you should absolutely take advantage.

Where to open an IRA

Many of America's most notable financial services companies offer both IRAs and Roth IRAs for those that are interested. Among those companies that routinely rank at the top of most lists include:

  • Fidelity Investments: In full transparency, my IRA is kept at Fidelity, and I have been thrilled with both the customer service experience I've received as well as the technology on their platform.

But you may also consider:

  • Charles Schwab


  • Merrill Edge

  • Vanguard

The bottom line

IRAs are an amazing way to save for retirement. And ultimately, whether you are financially able to max out yours or not does not matter as much as just beginning to prepare for your eventual retirement.

*Nothing in this post constitutes financial advice. If you're unsure about your options, you should always consult with a financial professional.

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About Nathan Zarcaro

Nathan Zarcaro is the founder of The Student Debt Destroyer and is passionate about personal finance related causes.  A 2018 graduate of Providence College's Liberal Arts Honors Program, Nathan studied Finance, and has worked for industry leaders in both finance and healthcare.  In his free time, Nathan enjoys playing golf and traveling with his wife Brigid.

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