Forecasted 2013 IRA Contribution Limit

I’m sure there are very few of you who will care, but I was interested in seeing if IRA contributions will increase anytime soon. They’ve been the same ($5,000) since 2008 so it seems like it should be time for an increase. I’m sure the IRS will reveal the actual limits in the next few months, but I’m a bit impatient with all of my plans.

I’ve never been a fan of how much lower IRA contribution limits are than 401k contribution limits. I’d much rather see an overall limit across all types of accounts. Let’s say, $50k maximum per year to all retirement accounts combined. I don’t think that limits on specific types of accounts make sense, but that’s just me…and I have a play with the cards I’m dealt.

So, back to the limits. In order to determine if a cost of living adjustment is required, the Consumer Price Index 12-month average as of August 31st of the current year is divided by the CPI 12-month average of the same period in the year before the prior adjustment. Then the existing limit is multiplied by this ratio. We still have a month to go until we’ll have the final numbers, but right now the calculation comes out to $5,560. Because this is over $5,500 (and the contributions only go up in $500 increments), it appears that the 2013 IRA contribution limit will be increased to $5,500. We’ll find out for sure in the next few months.

2 Responses to “Forecasted 2013 IRA Contribution Limit”

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  1. I only started doing an IRA recently, so I actually had no idea that they ever increased! I thought 5K would be it forever! lol, learn something new every day. It would be great if they raised the limit, although if they don’t, I guess I can just open a regular accoutn of some sort instead.

    • Will says:

      It’s actually gone up a pretty significant amount since 2000. Here’s an interesting timeline of the contribution limits.

      1974 (inception) – 1980: $1,500
      1981 – 2001: $2,000
      2002-2004: $3,000
      2005-2007: $4,000
      2008-Present: $5,000

      I would LOVE to see another $1,000 bump instead of $500. But we’ll see what happens.

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