How Roth IRA Catch-Up Contributions Work

A Roth IRA catch-up contribution is a provision in the U.S. tax code that allows people age 50 and over to contribute more to their Roth Individual Retirement Arrangement (IRA) than the standard annual limit. The purpose of this rule is to provide an opportunity to accelerate retirement savings during the later years of a person’s career, which can be helpful for those who started saving later in life.

Eligibility Rules and Contribution Limits

The requirement to make a catch-up contribution is based on age; an individual must be age 50 or older by the last day of the tax year for which the contribution is made. This works with both contribution and income limits that determine how much a person can save in their Roth IRA each year. These limits are subject to annual adjustments by the Internal Revenue Service (IRS) to account for inflation.

For 2025, the standard contribution limit for all IRAs is $7,500. The additional catch-up amount permitted for those age 50 and over is $1,000, bringing their total potential contribution to $8,500 per year. These figures represent the maximum that can be contributed across all of an individual’s IRAs, including both Traditional and Roth accounts.

Eligibility to contribute to a Roth IRA is also governed by Modified Adjusted Gross Income (MAGI) limits. For the 2025 tax year, a single filer’s ability to contribute begins to phase out with a MAGI between $146,000 and $161,000. For those who are married and filing a joint tax return, the phase-out range is between $230,000 and $240,000. If an individual’s MAGI exceeds the upper threshold, they cannot make a direct contribution to a Roth IRA for that year.

Making and Timing Your Contribution

The deadline for making both standard and catch-up contributions to a Roth IRA is the same as the tax filing deadline for that year. This is typically April 15th of the following year, and filing for a tax extension does not extend the deadline for IRA contributions.

Making a catch-up contribution is a seamless process. It is not designated as a separate deposit; the eligible individual simply contributes a higher total amount to their account. The financial institution that holds the IRA tracks the account holder’s age and reports the total contribution to the IRS on Form 5498. For example, a 52-year-old would make a total contribution of up to $8,500 without needing to specify which portion is the standard amount and which is the catch-up.

If a person has both a Traditional IRA and a Roth IRA, their total contributions to both accounts cannot exceed their applicable limit ($7,500, or $8,500 if age 50 or over). For instance, if a 55-year-old contributes $3,000 to a Traditional IRA, they can only contribute a maximum of $5,500 to their Roth IRA in the same year.

Correcting Excess Contributions

An excess contribution occurs when an individual contributes more to their IRAs than legally allowed for a given year, either by exceeding the age-based limit or by making a contribution when their MAGI is too high. An uncorrected excess contribution results in a 6% excise tax from the IRS for each year the excess amount remains in the account. This tax is calculated on Form 5329.

To avoid the penalty, the excess amount and any earnings it generated must be withdrawn. The deadline to take this corrective action is the individual’s tax filing due date, including any extensions. The financial institution can help calculate the earnings that must also be withdrawn. While the withdrawn excess contribution is not taxed, the earnings portion is considered taxable income for the year the contribution was made.

If the mistake is discovered after the tax deadline has passed, the options become more limited. One method is to withdraw the excess amount, though the 6% penalty will still apply for the tax year in which the excess contribution was made. Another option is to apply the excess contribution to a future year’s contribution limit. For example, a $1,500 excess from one year could be absorbed by contributing $1,500 less than the maximum limit in the following year, though the 6% penalty would still be owed for the initial year.

Recent Changes and Planning Strategies

The SECURE 2.0 Act of 2022 introduced an update for IRA catch-up contributions. Beginning in 2024, the $1,000 catch-up contribution amount for IRAs is indexed for inflation. This means the amount can increase in future years in increments of $100, depending on cost-of-living adjustments, though it remains at $1,000 for 2025.

For high-income earners whose MAGI exceeds the Roth IRA contribution limits, a “backdoor” Roth IRA is a viable option. This process involves making a non-deductible contribution to a Traditional IRA, for which there are no income limits. Shortly after, the funds from the Traditional IRA are converted to a Roth IRA. This allows individuals to fund a Roth IRA indirectly, and they can include the catch-up amount in the initial non-deductible contribution if they are age 50 or over.