The Internal Revenue Service released 2014 contribution limits for 401(k) plans and IRAs last week. With increasing healthcare costs, more expensive trips to the grocery store, and of course, higher taxes, it would be logical that retirement plan contributions would also increase, right?
WRONG--the IRS announced that contribution limits for 401(k) plans and individual retirement accounts will not change from 2013 levels. The justification--inflation hasn't risen enough over the past year to warrant an increase from $17,500 annually for 401(k), 403(b) or 457 plans, and $5,500 annually for IRAs (excluding the catch-up provision for those over 50).
I must admit, I didn't jump for joy when the news made its way to my desk, but nonetheless, decided to dig a little deeper. Since 2008, the IRS has granted one limit increase, a measly $500 in 2013. It's pretty safe to say we pay significantly more property taxes now than we did in 2008, and we certainly pay a significantly higher grocery bill than we did in 2008, if only contribution limits followed suit.
Although we cannot control the actions of the IRS, we can control how consistently we contribute to our retirement accounts. One thing is for certain, no one wants to work their entire life. So keep contributing, keep investing wisely, and keep your sights on the comfortable retirement you have worked so hard for.
Ethan Wade, Financial Advisor
(This article contains the current opinions of the author but not necessarily those of Brighton Securities Corp. The author's opinions are subject to change without notice. This blog post is for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities).