2007 IRA Contribution Limits and How it Affects the Employees
Most workers in the United States have benefited by the IRA fund set up by their companies such as the 401k program. It is mandatory for employers to do so wherein the employees could save a part of their earnings in the 401k to enable them to use it for their retirement. Some employers even go to the extent of contributing some fund of their own to the 401k fund to help the employee. These taxes on hk mpf contribution these funds are not deducted at the time when contributions are made but only when funds are withdrawn, giving the benefit of the lower tax rate at the time of retirement to the employee.
As per the Internal Revenue regulations employees can only remit a certain amount of their earnings to the 401k account. When it was started, the 2007 IRA contribution limits were $45,000, increasing by $1,000 every year after that. This total limit also applies to the total contribution made by the employer as well. There was no way an employee could contribute in excess to the stipulated amount since doing so would result on the employer being penalized for violating tax rules, apart from which such excess funds could not be held in the 401k retirement fund.
However, the 2007 IRA contribution limits made provisions for employees who were in their advanced years so that they could catch up on their contributions to the 401k fund. For those employees who are 50 years and older, they are allowed to contribute an additional $5,000 for the year 2008 with $500 being increased every year thereafter in order for them to recover the lost time due to their advanced years.