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NEW YORK (CNN/Money) - I contribute the max to my 401(k) and my IRA, but want to invest more for retirement. What should I do?

-- Gibson, Holland, Pa.

You, sir, are a bright and shining example for retirement savers everywhere. The fact that you're taking full advantage of government tax breaks by maxing out your 401(k) and IRA shows you already have good basic instincts when it comes to accumulating retirement wealth. And now you're ready to do even more. I salute you.

There are a couple of things people in your position typically consider. One is to contribute after-tax dollars to a 401(k) plan (assuming your plan allows it) or a non-deductible IRA (or both). Neither of these moves would give you an immediate tax break for the contribution itself. But the earnings on your contributions would enjoy tax-deferred growth.

Another route many people go is investing in a variable annuity, which is basically a mutual fund with some tax advantages. Again, you wouldn't get an immediate tax break in the form of a tax-deduction for the money you invest. But your money would grow free of the drag of taxes until you withdraw it.

But, to tell you the truth, I'm not crazy about any of these options. What bothers me about the 401(k) and IRA options I mentioned is that the earnings you withdraw are taxed at ordinary income tax rates (the after-tax dollars you contributed aren't taxed again, of course).

So this means if you invest primarily in, say, stock mutual funds that deliver a good portion of their gains in the form of long-term capital gains, you end up paying ordinary income tax rates (which can be as high as 35 percent) on your profits instead of the maximum 15 percent long-term capital gains rate such profits would normally face. That's a big disadvantage.

As for variable annuities, well, you have the same tax drawback -- that is, effectively converting long-term gains to short-term gains taxed at a higher rate-plus you can face some stiff ongoing investment fees that can seriously erode their returns. (For more on how variable annuities work and their various shortcomings, click here.

Basically, I recommend that you now turn your attention to investing in regular old taxable accounts, but in a way that mitigates the tax bite. Fortunately, this is fairly easy to do become of some investor-friendly changes in the tax laws in recent years.

If you're a stock investor, for example, you'll face a maximum rate of 15 percent on appreciation in the value of the shares you sell as long as you hold them more than a year. Even stock dividends are now taxed no higher than 15 percent. (Technically, they've got to be "qualified" dividends to get that advantageous rate, but most stock dividends fall into this category.)

Either way, that's a pretty good deal compared with the top tax rate of 35 percent you'll eventually pay on gains from after-tax 401(k) and non-deductible IRA contributions.

Not a stock investor? No problemo. Many mutual funds also offer some significant tax benefits as well. The key is to find "tax efficient" funds -- that is, ones that minimize taxable distributions and instead deliver their gains in share-price appreciation, which means you pay tax only when you sell (and then at lower long-term capital gains rates provided you hold the fund more than 12 months).

Many index funds are inherently tax efficient because they don't do a lot of trading that generates short-term gains taxable at higher rates. Many exchange-traded funds are also tax efficient because of the unique way they create and redeem shares.

And, finally, there's a breed of funds known as tax-managed funds, whose managers use a variety of techniques, such as offsetting gains in some shares by taking losses in others, to keep the tax bite to a minimum. (For more on tax-efficiency and tax-managed funds, click here.

To sum up, you should have no problem expanding your already admirable saving and investment efforts beyond 401(k)s and IRAs -- and doing so in a way that allows you to share as little of your gains as possible with the IRS.

Walter Updegrave is a senior editor at MONEY Magazine and is the author of "We're Not in Kansas Anymore: Strategies for Retiring Rich in a Totally Changed World.".