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Excess Contribution: Did you over-contribute to your IRA?

Sometimes it happens—you put more into your IRA in one year than the law allows. Fortunately, there are ways to fix it.
4 minute read

No matter what the reason, contributing beyond the IRS limit could trigger a tax penalty if you don't take steps to handle the excess.

Get details on IRA contribution limits & deadlines

What you can do

There are several ways to correct the mistake, but it's best that you don't wait too long. Here's some help:

If you discover the error before you file your tax return

You can withdraw the excess contributions plus their earnings by your tax-filing deadline—April 15.

Did you know?

You have many options to remove an excess contribution from your account. You can:

  • Transfer the amount "in kind" to a new or existing (taxable) nonretirement Vanguard Brokerage Account ("VBA").
  • Keep your investment in the market by transferring the excess amount to a new or existing nonretirement VBA.
  • Open a new VBA—it's fast and easy!
  • Move your excess contribution to a taxable account, allowing you to stay in the market. (You don't need to make any trades, and you don't have to meet Vanguard's minimum investment requirement for its proprietary mutual funds.)

Note: If you request to remove your excess contribution through electronic bank transfer (or check), your request may be delayed if funds aren't available in your Vanguard IRA® because the removal may require you to sell shares in one of your positions.

You can withdraw an excess contribution online by completing the appropriate DocuSign form.

If you discover it after you've filed your tax return

You can either:

  • Remove the excess within 6 months and file an amended return by October 15—if eligible, the excess plus your earnings can be removed by this date.
  • Remove the excess once discovered, even after October 15. You'll need to reduce next year's contributions by the amount of the excess. For example, if your limit is $7,000 and you exceed it by $1,500 in the current year, you can offset the excess by limiting your contributions to $5,500 the following year.

Be aware you'll have to pay a 6% penalty each year for every year the excess amounts stay in the IRA. The tax can’t be more than 6% of the total value of all your IRAs at the end of the tax year. Consult a tax advisor to discuss how this applies to you.

Note: If you contributed to a Roth and traditional IRA in the same tax year and your total contribution went over the allowable IRA amount, IRS regulations require you to remove the excess from the Roth IRA first.

You may want to talk with a tax advisor about the best way to handle any excess contributions.

Have questions? We're here to help.

Have questions? We're here to help.

You may wish to consult a tax advisor about your situation.