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February 28, 2017

Deadline for correcting IRA excess contributions


IRA contributions in excess of the limit are subject to a 6% excise tax, unless the excess amount is removed by the deadline along with any net income attributable (NIA). The deadline for removing excess contributions is the individual’s tax-filing deadline, including tax filing extensions. For individuals who file their tax return on time, or file for an extension on time, an automatic 6-month extension applies. This means that individuals with a tax filing due date of April 15 can have until October 15 to correct an excess contribution. The back office for an IRA Custodian might calculate the NIA. If they do not, the instructions provided by the IRS can be used. These are available here  and in IRS Pub 590-A.



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