Catch-up contributions are contributions made to a retirement account by individuals who are or will be 50 years old by the end of a given tax file year. These folks are allowed higher maximum contributions because they are closer to retirement than younger workers. Tax year 2005 catch-up contribution limits for traditional and Roth IRAs is $500 for a total annual maximum contribution of $4,500. For 401(k), 403(b), salary reduction SEP, and 457 accounts, it is an additional $4,000 for a total annual maximum contribution of $18,000. For SIMPLE plans, the 2005 maximum catch-up contribution is $2,000 for an annual maximum contribution amount of $12,000. Contributing to a retirement account can provide significant income tax advantages. For more tax advice and planning help in determining which retirement account is best for your needs, consult with a qualified tax or financial planning professional.
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