NEW YORK (Money Magazine)
As you've found, the IRS limits 401(k) contributions by high earners -- chiefly those who earned more than $115,000 in 2012 -- unless their company ensures that lower-paid workers are also saving for retirement.
Start by putting $5,500 ($6,500 if you're at least 50 by year-end) into a Roth IRA, which offers tax-free withdrawals in retirement, says Moline, III., financial planner Marty Kurtz.
In 2013 your allowed contribution falls to zero if your income tops $188,000 ($127,000 if you're single), but anyone under 70½ with earnings can fund a nondeductible IRA and then convert it to a Roth. But you may owe taxes on this back-door deposit if you have other traditional IRAs.
Related: 401(k) vs. Roth 401(k): Which one's right for you?
Then buy low-fee, tax-efficient funds in a taxable account, says Kurtz. Index funds work well; their infrequent trading minimizes taxable gains. 
What you'll have in retirement
If you've maxed out your 401(k) contribution, a Roth IRA is your best alternative, while tax-efficient funds in a taxable account are a good supplement.
| Initial amount | Value, net of taxes, of contribution invested for 30 years | |
| 401(k) | $5,000 (pretax) | $28,500 |
| Roth IRA | $3,750 (after tax) | $28,500 |
| Taxable account | $3,750 (after tax) | $22,400 |
Note: Assumes investment in stock index fund returning 7% annually; tax bracket of 25% at time of contribution and retirement. Source: Vanguard
First Published: July 8, 2013: 4:31 PM ET
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