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Why There Are IRA Contribution Limits

21 Nov

There are really a few individual who are really asking why there is a need for IRA contribution limits. Why is it that if they want to contribute more, they can’t because of these contribution limits? Any person who has his own IRA or Individual Retirement Arrangement account can absolutely enjoy a lot of various huge benefits. With his own IRA account, he can still manage to buy the things that he and his family needs and wants after he retires from his decades-long job either from a private company or from the national government. With his very own retirement savings account like the IRA, he can still be able to secure and protect his family’s future. Why, he can even have extra cash to start his own home-based business, then, he can buy his dream car or his dream house and even take his family for a week-long vacation somewhere in Europe or something.

That is the valid reason why persons are urged by the IRS or even by their very own employers or directors to put money to their own IRA account, be it the traditional type of IRA or the Roth IRA or even to both. He takes a small percentage of his paycheck, put it in his IRA account or accounts and then, watch as his money grow because of the interest that it will earn on a regular basis. Because of this idea, many persons have seriously considered increasing their own contribution so that their money can grow more and fast, agree?

That’s absolutely right. However, he needs to know that everyone is subjected to the IRA contribution limits. There are lots of several factors why this is so. One example of these reasons is that it can help the person with IRA accounts, either a conventional kind or the Roth IRA to manage his own funds pretty much. If there is no contribution limit whatsoever, he might not have sufficient money left to purchase the things that he will need and want everyday including that of his family’s.

From 2008 up to now, making it for four years, the IRS has been very consistent in imposing the contribution limit to $5,000. However, by the year 2013, the contribution limit will be increased. That means to say, in 2013, the contribution limit of an individual is not just $5,000 but it will be raised to $5,500.

However, the question is, why would there such a type of contribution limit? If there is anybody who would want to save more than what is being required, why not, agree? Essentially, the contribution limit is based on the general average income of the working class group. It is to make the financial arena level. This will keep persons to have equal opportunity based on their income and it will help persons in managing their funds pretty much whether or not they are earning a higher salary or a lesser one.

That’s one of the very reasons why there is a need for all of these IRA contribution limits. With the help of these contribution limits, anybody can now manage to save money on their IRA account, be it the regular kind or the Roth IRA or both, and can still have some money left to purchase their everyday wants and needs and steer clear of saving money on their retirement account only to have it withdrawn prior to the exact time comes because they needed the money to buy something which will definitely undermine their retirement savings instead.