annual contribution limits

Annual contribution limits refer to the maximum amount of money individuals can contribute to certain financial accounts or retirement plans within a year. These limits are set by governments to encourage saving while ensuring users do not exceed certain thresholds, which can vary based on account type, age, or income. For example, in retirement accounts like 401(k) plans or IRAs, there are specific dollar limits that change periodically. Staying within these limits helps individuals avoid tax penalties and allows for better financial planning for the future.