DanaB27
Expert Alumni

Retirement tax questions

You will have to tell your bank to withdraw the excess contribution (plus any earnings) by the due date otherwise you will pay a 6% penalty per year for each year the excess amounts remain in the IRA. 

 

Or you could accept and pay the penalty this year and apply the excess amount to your 2021 contribution, if you haven't contributed anything in 2021 yet. If you consider doing this, just be sure that you will be able to apply the excess as a 2021 Roth IRA contribution so that you do not incur additional penalties on this excess. You will enter the this on your 2021 return.

 

Please be aware your Roth IRA contribution may be limited based on your filing status and income:

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