Given the plans' valuable tax breaks, it makes sense to invest the maximum if you can. There are annual limits. In 2016, if you are under 50 years old, you can contribute a maximum of $18,000. If you're 50 or older, you can make an additional catch-up contribution of as much as $6,000, for a total of up to $24,000.
Those contribution limits change annually to track inflation. The reason: Inflation will gradually reduce the value of a dollar, meaning you will need to contribute more dollars to have the same purchasing power.
