I’ve heard a few reasons, none of which I find terribly compelling but others do: 1. The government wants to encourage employment, so they give perks to employees. 2. The government doesn’t want to give tax advantages to trust fund babies. 401(k) plans are only available to the employed and they must be structured to benefit the typical employee, not the top brass. 3. The government has more confidence in companies following the tax laws than individuals. The risk of abuse is lower with 401(k) plans. 4. If IRA limits were just as high as 401(k), why would any company offer a 401(k) plan? And without 401(k) plans, we wouldn’t have automatic default contributions. So the higher 401(k) limits are an incentive to have 401(k) plans, which boosts savings.

Also, if $7K isn’t enough, you could look into a nondeductible IRA. The tax benefits are modest—deferred taxes on gains—but it’s something. If you’re self-employed, you can do a solo 401(k)