tradional ira

[Pjsmith2464]

my sister is 62 and put $7000 in her traditional IRA which should  be allowed... however now turbo tax says she has to pay money back.... as a penalty?? why

[Bsch4477]

How much was her earned income?

[Pjsmith2464]

she is retired... she only made $413

[Bsch4477]

You can only contribute an amount equal to your earned income or $6000 whichever is less. 

[Pjsmith2464]

that can't be right... you should be able to put in at least $3000...... she is retired and is allowed $6000 plus an extra $1000 cause she is 62   i dont understand

[dmertz]

IRA contributions are not permitted to be more than compensation.  Compensation is income from employment.  If she only earned $413 and you have no compensation which can be used to make a spousal contribution, she is limited to an IRA contribution of $413.