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What happens if I make more than the maximum IRA contribution limit?

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If contributions to your IRA for a year were more than the maximum IRA contribution limit, for that year, you can generally 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. However, a penalty or additional tax may apply.

In general, if the excess contributions for a year are not withdrawn by the date your return for the year is due (including extensions), you are subject to a 6% tax. You must pay the 6% tax each year on excess amounts that remain in your traditional IRA at the end of your tax year. The tax cannot be more than 6% of the combined value of all your IRAs as of the end of your tax year. (The additional tax is figured on Form 5329).


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