Roth IRA contributions are made with after-tax dollars. Traditional IRA contributions are made with pre-tax dollars.
You may not be eligible to contribute to an IRA or the amount may be limited. If the contribution amount is not allowed or limited, TurboTax is calculating a 6% penalty due to excess IRA contributions.
- You will have a 6% excess contribution penalty for 2018 that repeats every year that it remains in the account.
- You need to take a normal distribution of the total excess before April 15, 2019 to prevent a 2018 penalty.
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