Discussion In the US, we've moved away from pensions and are increasingly using the sort of tax advantage retirement accounts discussed in this chapter. Most often we get the benefits through an employer sponsored 401(k), though there are other options. All have upper limits to what can be contributed. 5 5 (1) Are the limits available reasonable? For example, should someone making $50,000 a year only get a tax benefit to investing approximately $17k if invested through employer or $6k if done on their own? Should they be able to invest more tax deferred? Less? Should Roth IRAs be higher? Lower? Does it seem reasonable that they have to use the employer plan to get the higher amount? (3 pts)

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The question of whether the contribution limits for retirement accounts such as 401ks and IRAs are reasonable is complex and depends on various factor... View the full answer