http://www.businessinsider.com/401k-retirement-savings-gop-t...
The argument against unlimited tax free contributions is that above a certain point it becomes a tax break only for the rich.
That's where the lifetime cap comes in I guess. £1M isn't that crazy over a ~40 year timeframe for someone on a high income who isn't necessarily 'rich' and, at current annuity rates, won't buy you absolute luxury in retirement.
Also, as a self-employed person you can contribute up to $55,000 in the year depending on your income, in what's called a SEP IRA.
And some W-2 employees can contribute up to $55,000 in their employer 401(k) as well via "after-tax" contributions.
Can you elaborate?
What's the argument for having two different tiers of retirement accounts? Just let everyone contribute $18k to an IRA and end 401Ks entirely. The selection of funds in most company 401K plans is meager and the funds are expensive because the contributors are, in effect, a captive market.
I do think there is some advantage to the fact that it's possible to have a portion of one's paycheck go directly to a 401k without ever hitting your bank account. You can't currently do that with an IRA. It seems like that could be fixed though.
It gets even stupider when you realize that IRAs have limits on deductibility when your spouse has access to 401k, but you don't.
In the UK you can contribute 100% of your gross annual income every year, and get full tax relief up to the lifetime contribution limit of £1M ($1.38M).
We also have tax free savings & investment wrappers, called ISAs, in which you can deposit $28,000/yr, and within which all growth is free of any kind of tax.