I have $2 million in my 401(k) and Roth accounts — should I stop contributing now?

Recently, a Reddit poster with $2 million in 401(k) and IRA accounts asked when they should stop contributing to their retirement plans. The poster is 50 with a 45-year-old spouse, and they said they have other assets as well. Since $2 million is a pretty generous sum, it’s natural to wonder if they have enough. However, should they really give up investing in these plans?

Consider the other benefits of retirement accounts

Before the Reddit poster decides to stop contributing to retirement plans, it’s worth taking a moment to think about all of the benefits these accounts offer.

If the poster is contributing to a workplace 401(k), their employer is probably matching at least some of their contributions. If they stop investing in a 401(k), these matching funds would be lost. They’d be giving up free money that’s likely built into their compensation package and bringing home less than they could.

Both 401(k) and IRA accounts also offer tax advantages. With traditional accounts, money is invested with pre-tax funds and grows tax-free with taxes owed only upon withdrawal. With Roth accounts, money is invested with after-tax funds but it grows tax-free and can be withdrawn tax-free.  There’s also no requirement that Roth funds be withdrawn at any specific time, so the money can keep growing indefinitely and create a huge inheritance for loved ones.

Losing the tax benefits that retirement account contributions provide means giving up a valuable government subsidy and giving more money to the IRS. For someone in the 22% tax bracket, every $1,000 contributed to a 401(k) comes with up to $220 in tax savings and costs just $780. Losing out on that tax break could be painful when a bigger IRS bill comes due and you have nothing to show for it.

What else would you do with the money?

In most cases, it’s worth giving up access to some of your money now to prepare for a secure retirement later. However, if you already have $2 million invested, you’re on track to be pretty comfortable in retirement already. At this point, you need to think more carefully about what you’re giving up and if it is still worth the opportunity cost to make the retirement accounts bigger (and capture the above-mentioned benefits).

That ultimately depends on what else you could do with the money. If you don’t have much invested outside of these retirement plans, for example, you might want to switch to putting money into a taxable brokerage account that doesn’t come with strict withdrawal restrictions. Since you can’t typically take money out of 401(k) or IRA plans until 59 1/2 without incurring a penalty, switching to funding a taxable account could be necessary if you want to retire early.

Alternatively, if you’ve been living very frugally to amass your $2 million and you want to start to enjoy life a little more now, you may decide it’s worth pausing — or at least reducing — retirement account contributions to make that possible. As long as you’ve done the math, made sure your future retirement income is sufficient, and weighed the pros and cons of the tradeoff, this isn’t always a terrible idea.

Ultimately, your best bet is likely to talk with a financial advisor, make absolutely sure your retirement needs are met, and then explore what the best use of your money is now. That way, you can make a fully informed choice about whether continuing to sock money away in a 401(k) or IRA is smart or whether it should be going elsewhere once those accounts are already pretty well-funded.