I know that it is a retirement account, so why cant someone put like $10,000 in at once if they have the cash? Also what happens if you do overpay, why is it even possible to overpay in the first place?
In: Economics
taxes. that’s your answer. The government doesn’t want people sheltering their money from taxes.
They want you to save money, because a bunch of broke old people is bad for the economy, so they allow you to save money tax free, but they don’t want people to be able to hide 99% of their income in a tax free shelter (which a very wealthy person could do)
If I make 20M a year but only need like 200k, I could just put the rest in my retirement account every year, and the government sees almost none of my money for the next 50 years or more if ever depending on how crafty my beneficiary is with it after I die.
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