KBID 421 Date Created: 4/3/2003 Date Modified: 6/10/2025
Terms of Use
Yes, you can be penalized with a 6% excise tax each year for excess contributions to an IRA, but you can avoid this by withdrawing the excess contributions and any earnings by the due date of your tax return (including extensions).
An excess contribution is any amount contributed to an IRA that exceeds the annual contribution limits.
If you don't remove excess contributions and earnings by the tax filing deadline (including extensions), you'll face a 6% excise tax on the excess amount for each year it remains in the IRA.
To avoid the penalty, you must withdraw the excess contributions and any earnings from those contributions by the due date of your tax return (including extensions).
If you discover you've made an excess contribution, you can correct it by withdrawing the excess amount and any earnings by the due date of your tax return.
If you can't withdraw the excess contributions by the deadline, you'll have to pay the 6% excise tax each year for every year the excess remains in the account.