Why are the limits on 401k much higher than IRA?

401(k) accounts are better than IRAs in this one key area But one of the biggest advantages of a 401(k) compared to an IRA is that it allows you to contribute much more money to it than an IRA does. In 2021, the IRA contribution limit was $6,000 or $7,000 if you were 50 or over and eligible for catch-up contributions.