If you're worried you missed out on the opportunity to contribute to an individual retirement account (IRA) for last year, then you might be in luck. With a carryback contribution, you can still contribute to the prior year's IRA until you file that year's taxes.
You can make IRA contributions even if you also contributed to a 401(k) for the year – giving your retirement savings an additional boost.
Here's what you should know about carryback contributions and the potential benefits of doing so.
Am I eligible to make a contribution to last year's IRA limit?
You can make contributions that count toward a previous year's IRA as long as you have taxable income in that tax year. The maximum amount you can contribute is up to the IRA limit or your taxable compensation for the year if it's less than the limit. Basically, that means you can't contribute more to your IRA than what you've earned in a given tax year.
How much can I contribute to an IRA?
Every year, the IRS reevaluates the IRA contribution limit by considering cost-of-living adjustments. For 2026, the limit is $7,500.¹
If you are 50 or older by the end of the year, you're also eligible for what's known as a catch-up contribution. In 2026, you can contribute an additional $1,100 toward your IRA.
What is the benefit of making a carryback contribution?
Put simply, the benefit is to not miss out on any remaining tax advantages from your previous year's IRA. If you didn't max out your IRA for the prior year, a carryback contribution makes it possible for you to benefit from last year's tax advantages before dipping into this year's.
Who might consider carryback contributions?
Whether you've maxed out your 401(k) or have extra cash flow at the end of the year, carryback contributions give you more flexibility to make the most of your retirement savings strategy. There are many reasons you might want to consider making a carryback contribution.
Perhaps you've put money toward retirement in the previous year but haven't met your total allowable contribution yet. And if you simply never got around to making your IRA contributions for the prior year – and don't want to miss out on a year's worth of tax breaks – you can still invest that money via an IRA and reflect that in your tax filing.
How much can I contribute to an IRA if I have an employer sponsored plan like a 401(k)?
Although anyone eligible to contribute (or has a spouse who is eligible to contribute) to an employer sponsored plan may also contribute to a Traditional IRA for the same year, depending on your income, you may not be able to claim all of those contributions as a tax deduction when filing.²
Roth IRA contributions are not affected by coverage under an employer sponsored plan but those making over a certain amount will not be able to make a Roth IRA contribution.
If you're already eligible to contribute to a retirement plan through your employer for a given year, income levels may limit the amount you can claim as a deduction on your taxes. The income limits vary by tax filing status and are on a sliding scale from being able to take a full deduction, a partial deduction, or no deduction at all. Lastly, these income limits may change each year alongside updates to the contribution limits.
If you're wondering why these limits exist, remember that contributing to either a 401(k) or an IRA presents you with an opportunity to save on taxes. The federal government has to ensure that specific measures are in place to manage how much each person can take advantage of through these types of accounts and the tax savings that come with them. We go into more detail in this article.
Even though you may not be able to claim the contribution as a tax deduction, there are still benefits to making contributions to an IRA if you are in a financial position to do so. Compound returns in a tax-advantaged account, like an IRA, can grow to a meaningful amount by retirement.³
Is there anything else to consider?
There are two types of IRAs:
Traditional IRAs
Roth IRAs
Carryback contributions are possible with either a traditional or Roth IRA.
With a traditional IRA, contributions may be tax-deductible, as discussed in the previous section. Generally, the individual doesn't pay taxes on the earnings until retirement, when withdrawals are taxed as income.
With a Roth IRA, all contributions are made after-tax and are not tax deductible today. Any earnings and withdrawals from the plan are generally tax-free if the distribution is a qualified distribution.⁴ It's important to note that while anyone with earned income may contribute to an IRA, due to the after-tax status of Roth IRAs, there are additional income limitations in place, so it's important you brush up on these limits for your contribution strategy.
As a quick note, these income limits are also subject to change by the IRS when they reevaluate each year.
What if I don't have an IRA already?
If you don't currently have an IRA but want to make carryback contributions, you're in luck. You can open an IRA for the previous year any time before tax day.
If you already have a Gusto 401(k), you can add an IRA to your account. The IRA does not need to be opened by the end of the year in which you'd like to make the contributions.
Do Gusto IRAs allow for carryback contributions?
Yes – if you're already saving with a Gusto IRA, you can find step-by-step instructions for making carryback contributions to your traditional or Roth account here.
The information provided in this blog post is accurate and up-to-date as of April 2026. IRS plans and limits are subject to change. Please consult a Financial Professional for the most current information regarding your specific financial situation.
FAQs
What is a carryback contribution to an IRA?
A carryback contribution lets you make IRA contributions that count toward the previous tax year, even after December 31. You have until Tax Day (typically April 15) to make contributions for the prior year, giving you a second chance to maximize your IRA if you didn't hit the limit.
What is the deadline for making a prior year IRA contribution?
You can make a prior-year IRA contribution up until you file your taxes for that year — typically by Tax Day (April 15). You don't need to have opened the IRA by December 31; you can open and fund one before the filing deadline.
Can I make a carryback IRA contribution if I have a 401(k)?
Yes. Having an employer-sponsored plan like a 401(k) doesn't prevent you from contributing to an IRA. However, if you're covered by a workplace plan, your ability to deduct traditional IRA contributions may be reduced or eliminated depending on your income.
Can I make a carryback contribution to a Roth IRA?
Yes — carryback contributions are allowed for both traditional and Roth IRAs. Keep in mind that Roth IRA contributions have income limits, so high earners may not be eligible to contribute directly to a Roth IRA.
What are the IRA contribution limits for carryback contributions?
For 2026, the limit is $7,500 ($8,600 if you're 50 or older).¹ You can contribute up to the limit or your taxable compensation for the year, whichever is less.
Disclosures
¹ Subject to IRS cost-of-living adjustments. In 2026, individuals can contribute up to $7,500 between their traditional and Roth IRA accounts. If you're 50 or older, you can contribute an additional $1,100 ($8,600 in total).
² This content is for informational purposes only and is not intended to be taken as tax advice. Please contact a tax professional for further information.
³ This information is provided for illustrative purposes only, and is not intended to be taken as investment or tax advice. Consult a qualified tax and financial advisor to determine the appropriate investment strategy, investment, or managed portfolio for you. Investing involves risk and investments may lose value, including loss of principal.
⁴ Roth distributions will generally be tax-free if the following conditions are met: (a) Roth contributions are always distributed tax-free. The earnings on Roth contributions will be tax-free if the following conditions are met: (a) you're either over age 59 ½, disabled, or have died AND (b) it has been 5 years since your first Roth contribution under the current plan. Please consult a qualified financial advisor or tax professional to determine what is applicable to your financial situation.
