Excess contribution

The amount by which an IRA contribution exceeds the allowable limits. If an excess contribution is not properly corrected, a 6% IRS penalty applies.

Excess Contribution

Contributions made to an IRA over and above the maximum allowable contribution. One must withdraw excess contributions from the IRA in the current tax year or be subject to a 6% excise tax. Excess contributions are banned in order to remove the incentive for excessive tax avoidance.

Excess contribution.

An excess contribution occurs when you put more money into your individual retirement account (IRA) than the law allows.

You can withdraw the excess amount plus earnings by the date your tax return is due for the year, including extensions. You'll owe tax on the excess in the year you deposited it in your account but no penalty. Earnings are taxed in the year you receive them.

If you leave the excess in the IRA, you'll owe a 6% excise tax on that amount every year it remains in the account. If you miss the deadline for taking the money out without penalty, one solution may be to contribute less the following year so that your combined contributions are less than the total for the two years.

The term excess contributions may also be used to describe after-tax contributions that employees may legally make to their employer-sponsored retirement plans. This situation may arise if your yearly contribution to the plan, based on the percentage of salary your employer permits, is less than the annual federal limit.

Finally, plan sponsors may owe a 10% tax penalty if their plans do not distribute or correct excess contributions within two and a half months after the end of the plan year.

References in periodicals archive

Federal authorities said Preckwinkle kept the legal limit of $5,600, while returning the excess contribution of $4,400.

Preckwinkle disputes accusation that she kept Burke donation

If a taxpayer contributes more than the statutory limit, the excess contribution is subject to an excise tax of 6% of the excess contribution for each year the amount remains in the IRA.

Taxpayers engaged in abusive Roth IRA transactions: The taxpayers' use of a newly created corporation was held to be a vehicle to avoid Roth IRA contribution limits

This amount is also not considered an excess contribution to the HSA and is therefore not subject to the Sec.

Contributions to HSAs

"Driven primarily by public sector activities, backed essentially by domestic demand, characterised by an improved diversification of the economy, and reflected in the decline in the excess contribution of the petroleum sector to GDP growth vis-a-vis the non-petroleum sector, the overall growth process is expected to be sustainable moving forward," indicated the report.

Oman's GDP growth may 'ease marginally' in 2014

Any excess contribution not allowed will be carried forward indefinitely until claimed as a deduction.

Money matters: income tax and the employee doctor

It also observed an excess contribution of Rs 25.114 million to Renewals Reserve Fund to avoid lapse of supplementary grant.

AGP finds massive embezzlements in PPO audit report

For the record, a number of our new BHB fixtures this year means an actual increase in prize-money, with an excess contribution from Northern Racing and not the Levy Board.

Letter: Northern doing plenty