The 2021 IRA contribution limit is $6,000 (or $7,000 for those aged 50+). While that might seem like a small amount to many investors, there are actually a number of positives that come with this limit. Here are some of the benefits of the 2021 IRA contribution limit:

1. Lower Tax Costs: Making contributions up to the IRA limit will reduce your taxable income, resulting in lower taxes owed on your return. Additionally, the limited contribution limit allows you to steer clear of the traditional and Roth IRA income phase-outs, which can result in much higher taxes.

2. Tax Deferral: All investments held in an IRA are not subject to immediate taxes. Instead, they are deferred until withdrawn, potentially allowing the investments to compound at higher values over time.

3. Budgeting: Having a defined contribution limit can help investors to structure their investments in the most tax-efficient manner. Additionally, it provides a tangible limit when developing a savings and investing plan.

4. Investment Diversification: IRAs provide access to thousands of different mutual funds and other investments. This allows investors to pursue broader diversity within the bounds of a single contribution limit.

5. Estate