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I now make too much money to invest in a Roth IRA.
I get no tax benefit from putting money into a traditional IRA since I already have a 401k plan which I max out.
What should I consider investing in at this point?
I know the answer to this is likely "it depends" but it's mainly for retirement savings.
First off, make sure you are using your modified adjusted gross income (MAGI) as calculated by https://www.irs.gov/publications/p590a#en_US_2018_publink100025076. For example, 401(k) contributions and health insurance premiums paid through your employer are not counted. It's possible you are still eligible to make a full or partial Roth IRA contribution.
Second, do you have any money in pre-tax IRAs, or will you by the end of the year? For example, Traditional IRAs that you made deductible contributions to in previous years, or pre-tax 401(k)s rolled over into IRAs? If not, then you are a perfect candidate for the backdoor Roth. You make a non-deductible Traditional IRA contribution, then immediately convert. Neither of these steps have an income limit. And since there are only minimal gains (between contribution and conversion), there should be no taxes. Congress has blessed this strategy, and pretty much the only downside is a little extra tax paperwork (Form 8606). And if you do have a pre-tax IRA balance, you may be able to roll it into your current 401(k) and still be able to do the backdoor Roth.
Stop. Do you have any traditional IRA money?
Put it in the Traditional, non-deductible IRA anyway.
Invest it in cash only; you don't want any gains or losses.
And then, the very next day, go back and convert to Roth.
This "backdoor" was enabled by legislation some 15? years ago, when income limits for Roth conversions were eliminated. IRS clearly explained to Congress that this would create this "Roth Backdoor". Congress said "Yeah, we know". IRS was vague for awhile about whether this was OK, which scared people. But finally IRS and Congress started flat-out saying so. So yeah, it is OK.
The trick with Roth conversions is you must apportion across all your IRAs. Suppose you already made $25,000 of tax-deducted Traditional IRA contribs, and had $20,000 of capital gains. (all of which is taxable when you withdraw it). You also make a non-deductible, non-taxable contribution today, for a total of $50,000. When you convert, you need to pay tax on the deductible contribs and the proceeds (not the non-deductible contribs). So $45,000 of this would be taxable if you converted all of it today.
However you only want to convert $5000 today. So it is apportioned: $4500 that is taxable and $500 that is not. You then need to declare and pay income tax on the $4500.
There is no way to snake this year's Non-Ded IRA Contributions around this apportionment rule. So if you still have traditional IRA contribs lying around that you have not yet converted to Roth, you have to crunch the numbers and see if this is worth doing, and whether you should grind though the gory details of apportionment, or just convert All your IRAs to Roth in one slam-dunk.
Also a factor is if you are anticipating or forced to take a "gap year", a gap year is a fantastic time to do a Roth conversion.
As you say, it depends. Do you want to be an active investor, buying individual stocks (or real estate &c), or do you just want to put the money someplace and forget about it? Since I'm in the second group, my own answer (starting some decades ago) was just to put the money in a few mutual funds and basically forget about it.
Roth, IRA, and 401K are not investments, but are account types that receive special tax considerations. The tone of your question suggests that you do not understand this distinction.
There is nothing stopping you from opening up a brokerage account, and investing in the same mutual fund, ETFs, or individual stocks that may be part of your 401K or Roth. My advice would be to do exactly that.
Having taxable investments are handy as these funds are available for use prior to turning age 59.5 with no penalty. Those funds could be used for business investment or early retirement.
If you follow a strict asset allocation model you may prefer to have assets, that spin off cash, held in tax deferred accounts and save assets that do not in the taxable accounts.
