IRA contribution limits vary year to year. Over time the US government seeks to allow individuals to sock away some money for retirement and the government allows you to invest it any way that you want (with a few restrictions) in an individual retirement account or IRA. It has been suggested that with the present Democratic administration and Congress that individual retirement accounts may be an endangered species and that in short order the federal government will eliminate tax advantaged retirement accounts in favor of something that generates more revenue for federal programs. IRA contribution limits will be effected if the Democrats in congress are able to abolish individual retirement accounts. You will have your IRA contribution limits set to zero and you simply will not gain any tax advantage by being invested in an IRA. This is unfortunate as IRA’s have had many tax advantages for retirees for years and they clearly serve a purpose but it would seems that the government is heading in the direction of a central planning organization whereby they would control more of our money. This has interesting implications on the citizens of the United States who invest in retirement accounts. Before, we talk about where the IRA contribution limit rules are heading let’s first look at where they currently stand.

At the time of this writing the IRA contribution limits laws are as follows: Currently the US government allows a limited contribution to your individual retirement account each year. At the moment your IRA contribution limits are independent of inflation. There is simply a set amount that you can enter into your IRA each year. This will not always be the case. New provisions have been made to anticipate changes in inflation and how IRA contribution limits will be affected over time. When the limits switch over to being tied into inflation, then they will adjust each year. Currently, your annual contribution limit is contigent upon your age at the time of the deposit into your IRA. In 2009, the law will change slightly allowing the contribution limits to increase by $500 increments depending upon the levels of inflation.

Remember that your IRA limits are annual not one time affairs. For instance, if you are a 35 year old woman in 2009, you could deposit $416.67 per month. After twelve months your deposit will reach the maximum annual contribution limit of $5000.

IRAContribution Limits

It is possible that IRA contribution limits will become a thing of the past when IRA’s are abolished under the Obama administration. In their stead we may see government mandated guaranteed retirement accounts which will provide a 3% real return after inflation. For many people who mismanage their IRAs this required retirement account may be of some benefit. For many individuals this change will not be a good thing as the government will make decisions about your money.

For the moment, IRA contribution limits are set in stone at the levels that I have indicated above. We do not know exactly where they will be in the future so check back here often as I will be providing updates about the IRA policy and any changes being enacted by the politicians who we have elected.