This is the standard answer:
You have until April 15, 2025 to complete a process known as "removal of excess contributions." This is a special procedure, not a regular withdrawal. You will withdraw the excess contribution AND any earnings attributable to the excess contribution. The earning are taxable income on your 2024 return, even if you do not complete the procedure until 2025.
If you leave the money in the account, you will pay a 6% penalty, and an additional 6% penalty for every year in the future that the money remains in the account.
This is the loophole answer if your contributions earned more than 6% in 2024.
Leave the excess contributions in the account. Declare them as excess contributions and pay the 6% penalty. Then, in 2025, make a regular withdrawal of at least $7000. That will remove the excess so you don't pay another 6% penalty in 2025. You do not need to withdraw the earnings from the excess, which will remain in your account to earn more money tax-free.
If your investments made more than 6% in 2024, leaving the money in the account and paying the penalty this year, and removing the excess tax-free next year, will result in paying less tax overall.
This answer has been verified for accuracy by an Intuit expert employee
