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It's Time to Raise IRA Contribution Limits

Various proposals in DC to improve retirement access provide a great start, but in the absence of increased IRA limits, they won't get the job done.

Expanding access to workplace retirement savings plans may soon be an idea whose time has come. On both the political Left and the Right, policymakers have proposed legislation that would extend coverage to at least some of the approximately 50% of private-sector workers who lack a workplace retirement plan. As legislators contemplate making these changes--many of which are reasonable and constructive--they should also give thought to fixing one of the largest inequities in the retirement system: indefensible differences in contribution limits for various types of retirement accounts.

One may argue about the precise size of America's retirement savings gap--the Employee Benefits Research Institute says it is $4.1 trillion, and Boston College's Center for Retirement Research puts the number at $7.7 trillion--but it is clearly pretty big. Moreover, an increasing number of members of both major political parties agree that legislative action is required to address the shortfall between what individuals have saved and what they will need in retirement.