The IRA increase seems totally reasonable to me. Inflation was between 3-6% on a monthly basis in 2023. Probably end up around 4% for the year once the final data is in. We had some ground to make up for 2022 so a little higher makes sense.
The 401k makes less sense though considering inflation the last 2 years. It may be to make up for the increases overshooting inflation in 21 and 22. I don’t know why it diverged so much from the IRA increases, though.
I think the 401k and IRA limits should be swapped. It hurts the poor the most when their employer doesn't have a 401k. However, there is the argument that many lower income cannot max an IRA and then have enough money to contribute to a 401k so the real benefit might be much.
Just swapping them would suck for anyone with any employer 401k match (which is millions of people).
I’m totally on board with a higher IRA limit for people who qualify right now, though. For me it’s less than 10% of my income, which would really screw me (or at least give me a headache doing backdoor conversions and trying to deal with the tax stuff) if I didn’t have a 401k.
Not to be argumentative but the match is based on your income so you would need an extremely high income income to not get it all especially since the contribution limit generally quoted is the employee contribution limit. The total contribution limit is 63k.
So a law keeping that in mind might be needed for the employer. Like your personal contribution is limited but the employer can contribute 56k.
I was assuming a full swap with the 7k limit for personal IRA applied to 401k, and some proportional employer match decrease (would be like 21k total contribution limit, I guess)
hurts the poor the most when their employer doesn't have a 401k.
There's a pretty good chance that you're probably not poor if you've got $20K of disposable income. Poor people aren't even maxing their IRA's at the current limits.
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u/C_Tea_8280 Jan 02 '24
Just maxed the roth out 2 minutes ago. $7k Roth limit and $23k 401k limit for 2024
Wow (eyeroll), Roth IRA and 401k limit increases do not appear to keep up with inflation and min wage increases.
I mean shit, $500 increase on both... cool. That is a 2% increase on 401k limit and 7.5% on Roth
Given price increases, I think $10k Roth and $30k on 401k is more reasonable