According to Wikipedia the maximum contribution rate for a Roth IRA was 2000 dollars in 1998. In 2013 the contribution limit was 5500 dollars.

This appears to be an increase of a little less than 7% per year, which appears to be more than twice the average rate of inflation during that period which appears to be a lot less than 3%.

Is there any reason as to why the contribution limit has increased at twice the rate of inflation, or is this just the U.S. government trying to fix a mistake because it set such a low contribution limit when it first started out?


Not the US government, the US Congress, but yes - an attempt to slightly improve the horrible law.

You may notice that the $2000 limit was from 1981. When you take that into account, the current level of $5500 is more or less matching the inflation.

The original amounts were not automatically adjusted, and the Congress adjusted them "manually" through a separate legislation process each time. The last time (in 2009) added the provision to automatically update the values, so from now on there's no need in legislation to change the values, IRS will update them yearly, in $500 increments, based on the CPI rates.

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