Super savers and rich people will be able to put even more money in their 401(k)s next year.
Starting in 2015, contribution limits for the tax-deferred retirement accounts will increase by $500 to $18,000, the Internal Revenue Service announced Thursday.
Meanwhile, the “catch-up” amount that workers age 50 and over can contribute to their plans will rise to $6,000 from $5,500, for a total of $24,000 next year.
Of course, not many workers can afford to save those maximum amounts. In 2013, 12% of Vanguard’s more than 3 million 401(k) participants contributed the max allowed (not including any match from their employer), according to the company’s annual How America Saves report.
Vanguard’s report found that 36% of 401(k) savers earning $100,000 or more contributed the max, while only 2% of those earning between $50,000 and $74,999 maxed out their contributions.
Stephen Blakely from the Employee Benefits Research Institute noted that some people may not be able to contribute the maximum savings because their employer limits how much they can put in a 401(k).
The IRS said it was increasing the 401(k) contribution limits to reflect increases in the Consumer Price Index, which measures inflation. Yet the agency said the price increases were not enough to merit raising the contribution limits for traditional and Roth IRAs, which will remain unchanged at $5,500. The IRA catch-up contribution of $1,000 will also stay the same.
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