October 23, 2013
The five percent contribution limit for net worth and income less than $100,000 and a ten percent contribution limit for amounts over $100,000 is arbitrary and discontinuous. Intuitively the amount of money you can invest should be continuous, otherwise undesirable consequences may result as people inflate their income by taking normally undesirable risks to attain an income over $100,000, to enable a larger contribution limit. Simply allowing people to invest five percent of their income or net worth up to $100,000 and ten percent of amounts afterword would fix this issue.