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Retirement tax questions
@RNTAX2025 wrote:
In 2023, I made contributions for a total of $2400. I was working until May when I got laid off.
OK, your original question was unclear about 2023, so 2023 would not be excess.
For 2024, you can
A. Leave the excess contributions in the account and pay the 6% penalty. If you find work in 2025, the 2024 excess can count as part of your 2025 contributions so they won't be considered excess next year.
Or,
B. Remove the excess before April 15. This is a special procedure, not a regular withdrawal and you have to ask the IRA custodian specially. They must return to you the excess contribution and any earnings that are attributable to the excess contribution (they have a formula to use). The earnings (from 2024 contributions) are taxable on your 2024 return even though the excess is not actually returned to you until 2025. There is a procedure to report this in Turbotax.