Ira Contributions

Catch up Ira is an excellent option for those who had fallen behind or had started late towards an Ira contribution. Catch up Ira is an option for those who are 50 years and above that permits them to make additional Ira contribution towards their existing Ira. By maximizing your contribution levels towards your retirement plan, you can adjust the investment towards a better reap.

The catch up Ira was introduced in 2001 by The Economic Growth Tax Relief Reconciliation Act of 2001 (EGTRRA). This provision provides opportunity for those who want to save more than their allowed contribution limit as per their Individual Retirement Accounts or employer sponsored plans. This facility is applicable for those Ira owners who turn 50 years by the end of the tax year or plan year (employer sponsored plans). Another requirement is that the Individual should have contributed the maximum allowed amount towards the Ira during that year.

The Catch Up Ira provisions are applicable for Roth IRA and regular IRAs. However, the AGI limits in terms of deductibility towards the traditional IRA contributions as well as the Roth Ira contribution are still in play. Catch up Ira provisions helps in saving more towards the tax free or tax deferred retirement savings for the delinquent payments done in the earlier years of life. With the maximum contributions of $5,000, a catch up Ira of $1,000 makes your maximum contribution to $6,000 which means a lot of savings.

Catch up Ira is a boon for those who have had shortfalls in saving for retirement due to responsibilities such as raising children, or just the non availability of retirement plans earlier in their lives. The catch Up Ira contribution is large enough to make up for the years of missed opportunities to save. A fully phased in catch up IRA can be up to $2,500.

The traditional Ira and Roth Ira has the same catch up limit of $1,000 for 2008 where as a simple Ira allows $2,500 and 401k and 403b plans allow up to $5,000. If for the 401k plan had Ira contribution limit of up to $15,000 until you were 50 years old, after 50 you can add another $5,000 more. You may check with your employer on the catch up limits for consecutive years since the rates are adjusted based on inflation.

There is no more reason to regret for the lost years of unplanned retirement saving. It is time to understand the benefits and variations as per the plan and act as per expert advice.

Ira Contributions |