What Is an IRA Catch-Up Contribution?

An Individual Retirement Arrangement (IRA) catch-up contribution is an additional amount that individuals age 50 and older can deposit into their retirement accounts. This provision allows for contributions above the standard annual limit set by the Internal Revenue Service (IRS). The purpose is to provide an opportunity to bolster an IRA balance, recognizing that individuals may have a more urgent need to save as they approach retirement.

Eligibility and Contribution Limits

To make an IRA catch-up contribution, an individual must meet two requirements. First, they must be age 50 or older by the end of the calendar year for the contribution. An individual does not need to be 50 when making the contribution, only to reach that age by December 31st of that year.

Second, an individual must have taxable compensation, such as wages, salaries, commissions, or self-employment income, that is at least equal to the amount of their contribution. The total contribution, which includes the standard annual limit plus the catch-up amount, cannot exceed the person’s compensation for the year. For example, if an individual’s compensation is $6,000, their total IRA contribution cannot exceed $6,000, even if they are eligible for a larger amount.

For 2024 and 2025, the additional catch-up contribution amount is $1,000. This is on top of the regular IRA contribution limit of $7,000, allowing a total contribution of $8,000 for those eligible. This $8,000 limit is an aggregate total that applies across all of a person’s Traditional and Roth IRAs combined, not a per-account limit. The IRS may adjust the catch-up amount in future years for cost-of-living increases.

Application to Traditional vs Roth IRAs

While the eligibility rules for catch-up contributions are the same for both Traditional and Roth IRAs, the tax treatment differs for each account type. Eligibility to make a catch-up contribution does not guarantee a tax deduction or the ability to contribute to a Roth account. The individual’s Modified Adjusted Gross Income (MAGI) is often the determining factor.

Traditional IRAs

The ability to deduct a Traditional IRA contribution on a tax return depends on income and whether the individual or their spouse is covered by a retirement plan at work. If neither is covered by a workplace plan, the full contribution, including the catch-up amount, is deductible regardless of income.

For those covered by a workplace plan, the deduction is phased out as income rises. For 2025, a single filer covered by a workplace plan will see their deduction phased out with a MAGI between $79,000 and $89,000. For married couples filing jointly where the contributing spouse is covered by a plan, the 2025 phase-out range is between $126,000 and $146,000.

Roth IRAs

The ability to contribute to a Roth IRA, including a catch-up contribution, is directly limited by MAGI. Unlike with a Traditional IRA, high-income individuals are prohibited from contributing to a Roth IRA. If an individual’s income exceeds the specified limits, they cannot make any Roth IRA contribution.

For 2025, the ability for a single filer to contribute to a Roth IRA begins to phase out with a MAGI between $150,000 and $165,000. For those who are married and file a joint tax return, the income phase-out range is between $236,000 and $246,000. Individuals with MAGI above these ranges cannot contribute to a Roth IRA for that year.

Making and Reporting the Contribution

Catch-up contributions are handled directly with the financial institution that acts as the custodian for the IRA, such as a brokerage firm, mutual fund company, or bank. An individual deposits the funds into their IRA, and the custodian will record it as a contribution for the designated tax year.

The deadline for making these contributions is the tax filing deadline for that year, typically April 15 of the following year, not December 31. This gives individuals extra time to make their contributions for the prior year. When making a contribution between January 1 and the tax deadline, it is important to specify to the custodian which year the contribution is for.

The IRA custodian reports total contributions for the year on IRS Form 5498, which is sent to both the individual and the IRS. If an individual takes a tax deduction for a Traditional IRA contribution, they must report the deductible amount on Schedule 1 of their Form 1040 tax return.