Dave Ramsey Weighs In On IRAs, 401(k)s - What He Recommends For Best Results

Even if you have a 401(k) retirement plan, you might not know if you are doing everything possible to get the best results for retirement. 

Dave Ramsey, a leading personal finance expert and founder of Ramsey Solutions, has provided specific guidance on how to invest in different retirement accounts and which to prioritize. Overall, Ramsey encourages people to invest 15% of their gross income for retirement, but only if they are debt-free and have a fully funded emergency fund.

Here is more information about Ramsey's views on 401(k)s, IRAs, and his suggestions for setting yourself up for retirement success.

Ramsey encourages you to plan your retirement contributions

Many people invest in retirement accounts without considering whether they should follow a specific plan or invest across various accounts in a particular order. Ramsey is a huge proponent of workers investing their hard-earned money in the most financially advantageous way. For example, he suggests contributing to retirement accounts in a three-step process. Here's more information about that process and why he recommends it.

Step 1: Contribute to a 401(k) up to your company match

The first step Ramsey recommends is to contribute to your 401(k) up to your company match, if your company offers one. That's because a company match is free money you can add to your retirement nest egg. If you're not sure whether or not your company offers a match, make sure to look for your 401(k) paperwork. Your 401(k) documents should explain whether you have a match and the amount you must contribute to receive it. Pay close attention to when your money is fully vested. Your company match belongs only to you once you are fully vested in the plan. Some companies offer immediate vesting, while others require you to work there for a certain number of years before you're fully vested.

Second, open and max out a Roth IRA

The next step in Ramsey's three-step plan is to open and max out a Roth IRA. In 2026, workers can contribute $7,500 annually or $8,600 for those 50 and older. The benefit of a Roth IRA is that you contribute after-tax income to it, so when you are in retirement, you can withdraw your money tax-free, as long as you meet certain qualifications. To contribute to a Roth IRA, you have to make under $168,000 as an individual or $252,000 for those married filing jointly.

Third, use your remaining funds to contribute back to your 401(k)

Finally, if you still have funds remaining after contributing to your 401(k) for your match and maxing out a Roth IRA, Ramsey says to go back and contribute to your 401(k) up to the maximum. The 2026 maximum for a 401(k) is 24,500. If you are age 50 or above, you can contribute an extra $8,000 per year and make catch-up contributions. Those between the ages of 60 and 63 can contribute $11,250 annually on top of the 401(k) contribution limits.

Ramsey's advice for high-earners who don't qualify for a Roth IRA

As mentioned, Roth IRAs have income limits. However, even if you're a high earner and above the Roth IRA income limit, there are still other options. First, you can use a traditional IRA instead. You can also consider a backdoor Roth conversion, where you convert your pre-tax retirement funds into a Roth IRA and pay the tax in the present day. The purpose of doing this, even if you have to pay taxes today, is to optimize your finances during your retirement years, since you would not have to pay taxes when you withdraw it.

Ramsey's broader debt-free philosophy

Even though Ramsey has a three-step plan for investing in retirement funds, he does not encourage people to start investing unless they are completely debt-free and have a fully funded emergency fund. Once that happens, he encourages people to consistently invest 15% of their gross income in diversified growth stock mutual funds.

Ramsey's framework: The 7 Baby Steps

Ramsey includes all his money lessons in his 7 Baby Steps framework. This framework outlines seven steps people can take to become financially free. The first step is to save a $1,000 emergency fund. The second step is to pay off all debt except the mortgage. The third step is to build a 3 to 6-month emergency fund. The fourth step is to invest 15% of your income. The fifth step is to save for your kids' college. The 6th step is to pay off the mortgage, and the seventh step is to build wealth and give generously.

What to do if you need financial advice

You can call into the Dave Ramsey Show to ask your money questions. He has a very popular radio show that is also a podcast. Another option is to speak with a financial advisor, who can review your current retirement plan, your income, and take the time to understand your goals. A financial advisor can help you optimize your taxes now and into the future.

Bottom line

If you want to meet your retirement goals, it's important not only to invest in retirement but to invest in the right order. Dave Ramsey provides a strategy for investing for retirement that takes advantage of your employer match and ensures you max out your Roth IRA. His goal is to help set you up for a strong retirement in the future, where you can spend your days enjoying your lifestyle and being generous with others.