I have an overpayment on my IRA deposit. Can I just pay the penalty and apply the extra amount to next years deposit?

[reneaucook]

I had an overpayment for 2015 and I deposited my payment for 2016 before I new it. So I have a penalty charge for this year. Can't I just let the balance of the overpayment ride until next year instead of making a payment for 2017? Won't it just kind of work itself out and I can just pay the penalty tax.

[macuser_22 · Accepted solution]

You can.   See IRS Pub 590A

Traditional IRA:

https://www.irs.gov/publications/p590a/ch01.html#en_US_2016_publink1000230873

You cannot apply an excess contribution to an earlier year even if you contributed less than the maximum amount allowable for the earlier year. However, you may be able to apply it to a later year if the contributions for that later year are less than the maximum allowed for that year.

Roth IRA:

https://www.irs.gov/publications/p590a/ch02.html#en_US_2016_publink1000231024

Applying excess contributions.    If contributions to your Roth IRA for a year were more than the limit, you can apply the excess contribution in one year to a later year if the contributions for that later year are less than the maximum allowed for that year.