Quote:
Originally posted by nostatic
Can anyone explain to me why the IRA contribution is so low? What the hell can $3K/year get you?
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IRA is what it says individual retirement account and was invented to supplement Social Security. The contribution is technically unlimited. It is just that 3k is deductible on your taxes. It makes a big difference when you start one in you 20s vs starting in your 40s. Also you still have the option to put money in a 401(k) and roll over to an IRA without penalty.
The advantage to 401(k) vs. Traditional IRA is if you have employer matching however both are taxable at retirement age. Roth IRAs distributions are non-taxable at retirement.