What if I made an excess Roth IRA contribution because my income is too high?

Your Roth IRA contribution may be an excess contribution, depending on your modified adjusted gross income (MAGI). TurboTax will check for this. There’s a 6% per-year penalty on an excess amount for as long as the excess is in the account.

You can either fix an excess contribution before the tax filing deadline (including any filing extensions), or pay the 6% penalty.

To avoid the penalty before your tax filing deadline:

• Withdraw the excess contribution plus earnings:
  • The earnings are included in your taxable income for the year the excess contribution was made.
  • You’ll still receive a 1099-R to report these earnings on your tax return.
• Or you can recharacterize the Roth IRA contribution as a traditional IRA contribution:
  • Contact your plan administrator for guidance on this process.
  • After your recharacterization, see how to do this in TurboTax.

If you’re paying the penalty you can:

• Apply the excess to next year. You can:
  • Leave the excess contribution in the Roth IRA
  • Apply it to next year’s contribution
  • Ensure you cover this when fguring your contribution amounts for next year.
• Or, remove only the excess contribution after your tax deadline. After you file:
  • Request a regular distribution between October 17 and December 31, 2025.  This is to remove the excess contribution- without earnings.
  • You’ll keep the earnings in the Roth IRA account.
  • You'll take the 6% penalty on the 2024 return.
  • You'll avoid the penalty on next year’s tax return.

Check the Roth IRA contribution limits for 2024 and 2025 to avoid future excess contributions due to based on your filing status and MAGI.