“Catch-Up Contribution” is a term used in Individual Retirement Accounts (IRAs) and other types of retirement savings plans. It refers to the extra amount that individuals who are aged 50 or older are allowed to save in their retirement accounts.
The purpose of this provision is to help people who may have started saving for retirement later in life, or who have not been able to save enough, to “catch up” in their retirement savings. This is particularly important because retirement savings often grow tax-free, so the more you can save earlier, the more time your money has to grow.
The annual catch-up contribution limit for IRAs was $1,000, meaning that individuals aged 50 or over could contribute $7,000 in total to an IRA each year instead of the standard $6,000. However, these limits are often adjusted over time to account for inflation, so they may be different now.
Please check with the latest IRS guidelines or a financial advisor to get the most accurate and up-to-date information.