Consider starting a part-time business and putting some of your business earnings into another retirement fund to supplement your employer-sponsored plan.
Marc Henn, a Certified Financial Planner and president of Harvest Financial Advisors in West Chester, Ohio, says an IRA is the simplest choice, although your extra income may erode the tax benefits of that retirement vehicle.
Single taxpayers with an employer-sponsored plan begin losing the IRA tax deduction when they earn $56,000 in modified adjusted gross income, and the deduction disappears entirely when earnings hit $66,000. Married joint filers with employer-sponsored plans get a partial deduction when their MAGIs exceed $90,000, and the tax deduction disappears entirely at $110,000.
Income limits apply to Roth IRA contributors as well, though they're much higher: $122,000 for single taxpayers and $179,000 for married filing jointly. Of course, with a Roth, you forgo a tax deduction upfront but reap tax-free benefits at the time you withdraw the money.
Don't forget about other types of retirement vehicles with tax-favorable benefits. With a Simplified Employee Pension, or SEP plan, or a Single 401(k), you can avoid the income restrictions that an IRA imposes. A SEP allows contributions of up to 25 percent of your salary, or $49,000, whichever is less. The Single 401(k) contribution limit is $49,000, with a $5,500 catch-up contribution allowed for those 50 or older.