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@otto_alum15 The formula to calculate the increases is literally based on year-over-year inflation (CPI-U), and then rounded, typically to the next lower multiple of $500. Over time these adjustments do accurately track with inflation.

@pelz86 Inflation was lower in 2023 than it was in 2022, so the increase for 2024 is a bit less than it was for 2023. It's not arbitrary. It's based on a formula specified in the law, which involves figuring out the total inflation since some "base" year (which I think is like 2005 or 2008) and...

@ehr Inflation is what causes these limits to increase. Higher inflation means the limits go up faster. Lower inflation means they go up slower, if at all.

@kimberlee Before anyone complains, these limits (and the amount by which they increase) are set by law. The IRS is just following the rules enacted by Congress. If you're not happy that the IRA limits are so much lower than the 401k limits, or that the DCFSA limit isn't indexed to inflation...