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Adjustments to IRA contribution limits

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in Small Business Tax

Q. Aren’t contributions to IRAs scheduled to revert to the lower $2,000 limit in the near future? J.A.H., Verona, N.J.

A. Not anymore. When contribution limits for IRAs, 401(k) plans and various other employer-sponsored retirement plans were increased in 2001, the higher limits were scheduled to expire in 2010. However, the Pension Protection Act of 2006 (PPA) made these increases permanent. Under the PPA, the contribution limits for these retirement saving vehicles are indexed annually for inflation.

Tip: The contribution limit for IRAs hasn’t moved at all in recent years. It’s been $5,000 ($6,000 if you’re age 50 or older) since 2008.

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