If you filed a timely federal tax return, you typically have until October 15th of the year following the year you made an excess IRA contribution to correct that error. The IRA contribution limit for 2017 is $5,500 ($6,500 if you are age 50 or older).
Did you exceed the contribution limit for your traditional or Roth IRA? If you don’t correct the mistake in a timely manner, a 6% excise penalty will be imposed.
The 6% penalty will be applied each year the excess amount remains in the IRA, so you will want to correct this error as soon as possible. Not only must the excess contribution be withdrawn, but you must also withdraw any net income attributable (NIA).
What if you changed your mind and have an unwanted contribution? The October 15th deadline to remove this amount still applies.
- Unwanted contributions can’t be corrected after the October 15th deadline
- True excess contributions may still be corrected after the deadline, but penalties may apply