General Discussion
In reply to the discussion: There's talk of capping 401(k) contributions at $2,400 per year [View all]Rollo
(2,559 posts)But it involves needing a higher IRA contribution limit to offset the annual profits from a regular investment account.
Tax-free muni bonds are all well and good, but the low yields are not particularly attractive for the past decade.
Again, why are 401K contribution limits set so high (18,000 to 24,500 for seniors) but IRA limits relatively low (5,000 to 6,500 for seniors)??? I have had 401k plans before and they are a great ways to offset income, even without an employer match, but I fail to see why a nation where most people are employed by small businesses tries to penalize them for not working for a big company with a cushy 401k plan.
Even the self-employed can get an IRA with a higher contribution limit than regular employees for companies without 401k plans.
It makes no sense.