# Limits on 401K/IRA Contributions: why?
**URL:** https://community.clark.com/t/limits-on-401k-ira-contributions-why/6412
**Category:** Investing
**Created:** [October 25, 2024, 4:08pm UTC](https://community.clark.com/t/limits-on-401k-ira-contributions-why/6412 "2024-10-25T16:08:00Z")
**Posts on this page:** 16
**Page:** 1
### Author:  [@forrest](https://community.clark.com/u/forrest)
#### Post date: [October 25, 2024, 4:08pm UTC](https://community.clark.com/t/limits-on-401k-ira-contributions-why/6412/1 "2024-10-25T16:08:00Z")
Has Clark ever looked into the politics of why we are limited in what we can contribute to our retirement accounts?
God forbid if the ‘rest of us’ ended up wealthy at an older age. I read there are tax reasons, concerns that some will take advantage – _no that wealthy people would ever do that, gosh no_ – I’d love to hear others perspectives on this. It’s something I have always found very troubling, and these limits are most definitely not congruent with inflation, etc.
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### Author:  [@ole1845](https://community.clark.com/u/ole1845)
#### Post date: [October 26, 2024, 2:29pm UTC](https://community.clark.com/t/limits-on-401k-ira-contributions-why/6412/2 "2024-10-26T14:29:05Z")
There are limits because the government doesn’t want you shielding an excessive amount of income from taxation. The government needs money to operate. 401K contributions delay tax collection for decades or longer. The limits are raised periodically.
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### Author:  [@ochotona](https://community.clark.com/u/ochotona)
#### Post date: [October 26, 2024, 7:43pm UTC](https://community.clark.com/t/limits-on-401k-ira-contributions-why/6412/3 "2024-10-26T19:43:55Z")
I think it would be extremely unfortunate if someone could drop a lump sum of $1M or $1B into a Roth.
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### Author:  [@H200h](https://community.clark.com/u/H200h)
#### Post date: [October 26, 2024, 8:32pm UTC](https://community.clark.com/t/limits-on-401k-ira-contributions-why/6412/4 "2024-10-26T20:32:26Z")
> [@ochotona](#):
>
> I think it would be extremely unfortunate if someone could drop a lump sum of $1M or $1B into a Roth.
It’s been done! You just need connections… 🙂
> **[Peter Thiel Has Accumulated $5 Billion In A Tax Free Roth IRA Designed To...](https://www.forbes.com/sites/sarahhansen/2021/06/24/peter-thiel-has-accumulated-5-billion-in-a-tax-free-roth-ira-designed-to-help-the-middle-class-save-for-retirement-according-to-new-report/)**
>
> Here’s how he did it.
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### Author:  [@ochotona](https://community.clark.com/u/ochotona)
#### Post date: [October 26, 2024, 8:46pm UTC](https://community.clark.com/t/limits-on-401k-ira-contributions-why/6412/5 "2024-10-26T20:46:23Z")
I forgot about the backdoor. I can’t do it because I have commingled funds in my IRA. That’s what my CPA tells me anyway. I’m guessing the backdoor could be in danger of going away by 2026.
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### Author:  [@butler](https://community.clark.com/u/butler)
#### Post date: [October 27, 2024, 1:52am UTC](https://community.clark.com/t/limits-on-401k-ira-contributions-why/6412/6 "2024-10-27T01:52:17Z")
> [@H200h](#):
>
> It’s been done! You just need connections… 🙂
>
> [Peter Thiel Has Accumulated $5 Billion In A Tax Free Roth IRA Designed To Help The Middle Class Save For Retirement, According To New Report](https://www.forbes.com/sites/sarahhansen/2021/06/24/peter-thiel-has-accumulated-5-billion-in-a-tax-free-roth-ira-designed-to-help-the-middle-class-save-for-retirement-according-to-new-report/)
Nah…you just need a Roth and shares of technology stocks that explode in value. Regardless of the wealth envy, you aren’t limited in how much your Roth can appreciate over time.
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### Author:  [@ole1845](https://community.clark.com/u/ole1845)
#### Post date: [October 27, 2024, 1:54am UTC](https://community.clark.com/t/limits-on-401k-ira-contributions-why/6412/7 "2024-10-27T01:54:45Z")
> [@butler](#):
>
> > [@H200h](#):
> >
> > It’s been done! You just need connections… 🙂
> >
> > [Peter Thiel Has Accumulated $5 Billion In A Tax Free Roth IRA Designed To Help The Middle Class Save For Retirement, According To New Report](https://www.forbes.com/sites/sarahhansen/2021/06/24/peter-thiel-has-accumulated-5-billion-in-a-tax-free-roth-ira-designed-to-help-the-middle-class-save-for-retirement-according-to-new-report/)
>
> Nah…you just need a Roth and shares of technology stocks that explode in value. Regardless of the wealth envy, you aren’t limited in how much your Roth can appreciate over time.
Correct. He didn’t put millions into his Roth account. He put shares of a company worth pennies into his Roth IRA and it exploded in value.
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### Author:  [@H200h](https://community.clark.com/u/H200h)
#### Post date: [October 27, 2024, 4:08am UTC](https://community.clark.com/t/limits-on-401k-ira-contributions-why/6412/8 "2024-10-27T04:08:05Z")
> [@butler](#):
>
> Nah…you just need a Roth and shares of technology stocks that explode in value. Regardless of the wealth envy, you aren’t limited in how much your Roth can appreciate over time.
> [@ole1845](#):
>
> Correct. He didn’t put millions into his Roth account. He put shares of a company worth pennies into his Roth IRA and it exploded in value.
What are the chances that either of you guys would have the connections to get the IPOs or pre-IPOs to do the same thing?
Like I said… it’s all about the connections. In one year his Roth grew from $1,664 to $3.8 million — a 227,490% increase in one year.
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### Author:  [@billinin](https://community.clark.com/u/billinin)
#### Post date: [October 27, 2024, 3:25pm UTC](https://community.clark.com/t/limits-on-401k-ira-contributions-why/6412/9 "2024-10-27T15:25:51Z")
> [@ochotona](#):
>
> I think it would be extremely unfortunate if someone could drop a lump sum of $1M or $1B into a Roth.
> [@H200h](#):
>
> It’s been done! You just need connections… 🙂
Are you saying he exceeded the annual maximum contribution and was allowed to do so?
> [@H200h](#):
>
> Like I said… it’s all about the connections. In one year his Roth grew from $1,664 to $3.8 million — a 227,490% increase in one year.
Even if we assume this (without evidence) it has nothing to do with the Backdoor Roth procedure. No reason to demonize those that use the BDR allowed by law.
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### Author:  [@butler](https://community.clark.com/u/butler)
#### Post date: [October 27, 2024, 5:03pm UTC](https://community.clark.com/t/limits-on-401k-ira-contributions-why/6412/10 "2024-10-27T17:03:04Z")
> [@H200h](#):
>
> What are the chances that either of you guys would have the connections to get the IPOs or pre-IPOs to do the same thing?
Peter Thiel was a co-founder of Paypal…and you are complaining about his ability to get IPO shares!!! Is that the secret connection?? He has provided venture capital to lot of different companies. Not all of them have been successful. Your hatred of wealthy people is clouding your judgment.
Risking capital and getting rewarded is the premise of our economic system. I think there is even a word for it…let me think…oh yeah, its capitalism.
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### Author:  [@H200h](https://community.clark.com/u/H200h)
#### Post date: [October 27, 2024, 8:51pm UTC](https://community.clark.com/t/limits-on-401k-ira-contributions-why/6412/11 "2024-10-27T20:51:11Z")
> [@butler](#):
>
> Risking capital and getting rewarded is the premise of our economic system.
Providing a way for working people to save hard-earned money for retirement years and letting it grow tax-free until needed is the premise of the Roth IRA program.
It wasn’t designed to provide a way for multi-billionaires to game the system to harvest tax-free billions.
In two years Theil will be 59 yrs old and be able to pull well over $5B from his Roth and you, me and all of the rest of the taxpayers will have to pick up the slack in resulting lost tax revenue. I think those are the taxes that you complain are too high already. 🙂
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### Author:  [@ratbert2k](https://community.clark.com/u/ratbert2k)
#### Post date: [October 27, 2024, 9:21pm UTC](https://community.clark.com/t/limits-on-401k-ira-contributions-why/6412/12 "2024-10-27T21:21:00Z")
> [@H200h](#):
>
> It wasn’t designed to provide a way for multi-billionaires to game the system to harvest tax-free billions.
He wasn’t a multi-billionaire when he made that investment, and “game the system” is a disingenuous characterization of using the system exactly as the law allows. It **was** designed for people to harvest tax-free money. You apparently don’t like that he used it effectively.
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### Author:  [@butler](https://community.clark.com/u/butler)
#### Post date: [October 28, 2024, 12:42pm UTC](https://community.clark.com/t/limits-on-401k-ira-contributions-why/6412/13 "2024-10-28T12:42:15Z")
> [@H200h](#):
>
> In two years Theil will be 59 yrs old and be able to pull well over $5B from his Roth and you, me and all of the rest of the taxpayers will have to pick up the slack in resulting lost tax revenue.
There is no lost tax revenue. The taxes were paid on the contributions before going into the account. Whether the account is now worth $5, $500, $500k or $5B does not matter. I know many people with 7-figure Roth IRA accounts, which are substantially more than they contributed. Is that lost tax revenue also?? Of course not…
I think you are having trouble understanding how the Roth IRA works, like you did with the flat tax system. If you stop obsessing about other people’s wealth…I think you will lead a happier life.
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### Author:  [@H200h](https://community.clark.com/u/H200h)
#### Post date: [October 28, 2024, 1:12pm UTC](https://community.clark.com/t/limits-on-401k-ira-contributions-why/6412/14 "2024-10-28T13:12:17Z")
> [@butler](#):
>
> There is no lost tax revenue.
When someone realizes a gain of $3B and pays zero taxes on that gain you think there is no lost revenue to the IRS? And in the next breath you suggest that a family living below the poverty line should pay the same tax rate as Peter Theil?
Interesting world view! Reminds me of a character in the leading role of a classic Christmas story… 🙂
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### Author:  [@butler](https://community.clark.com/u/butler)
#### Post date: [October 28, 2024, 1:35pm UTC](https://community.clark.com/t/limits-on-401k-ira-contributions-why/6412/15 "2024-10-28T13:35:24Z")
> [@H200h](#):
>
> When someone realizes a gain of $3B and pays zero taxes on that gain you think there is no lost revenue to the IRS?
Every single person that has a Roth IRA / Roth 401k is not paying taxes on dividends or realized and unrealized capital gains that occur within the account. This is really basic financial information…not sure why you are having trouble with it.
Here is a good article to help you understand how it works:
[https://www.fidelity.com/learning-center/smart-money/how-does-a-roth-ira-work](https://www.fidelity.com/learning-center/smart-money/how-does-a-roth-ira-work)
Until you can grasp how these accounts work…no point in further discussion.
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### Author:  [@billinin](https://community.clark.com/u/billinin)
#### Post date: [October 28, 2024, 3:02pm UTC](https://community.clark.com/t/limits-on-401k-ira-contributions-why/6412/16 "2024-10-28T15:02:37Z")
> [@H200h](#):
>
> When someone realizes a gain of $3B and pays zero taxes on that gain you think there is no lost revenue to the IRS? And in the next breath you suggest that a family living below the poverty line should pay the same tax rate as Peter Theil?
>
> Interesting world view! Reminds me of a character in the leading role of a classic Christmas story… 🙂
Don’t mean to go off on a tangent but what do you think of the deductibility of HSA accounts and participants being able to use the gains tax-free for qualified medical expenses?