IRA Catch-Up Contributions: Maximize Your Retirement Savings

If you have an IRA, the IRS will allow you to make a catch-up contribution once you are old enough. For most people, they can contribute up to $5000 per year into an IRA, or a Roth IRA. Once you reach the age of 50, you will actually be able to make catch-up contributions. This allows you to put another $1000 per year into your IRA. This basically gives you 10 years to make extra contributions to your retirement account before you reach the age that you can start withdrawing from your account.

Purpose

This catch-up contribution was enacted to help many people that get started saving for retirement late in life. Many people put off saving for retirement because they have several other things that they want to pay for first. By the time they start saving for retirement, they might be 40 or 45 years old. As a way to help these people put more money into their retirement accounts and invest more money, the IRS allows them to make these catch-up contributions. Over the course of several years, this extra contribution can really add up.