Overfunding a non-deductible Traditional IRA


T

thehed

What happens if I overfund my non-deductable taditional IRA?

I have two separate accounts (one with Fidelity and one with a stand
alone mutual fund company). Looking back on paperwork I see I
selected the stand alone fund as an IRA. I funded this account with
$2500. A couple months later I set up the Fidelity account, with an
initial funding of $2500, then set up monthly transfers of $200 per
month. So I have exceed my $5000 limit by $400 so far.

What are the implications of this? Will I have to take out extra
money and pay taxes?
 
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S

Steve Pope

So I have exceed my $5000 limit by $400 so far.
What are the implications of this? Will I have to take out extra
money and pay taxes?
If this is happening during the current tax year (2008) you
may be able to go to the financial institution and un-do
the erroneous transactions. I have known of cases where
this approach has worked, and there were no problems downstream.

The sooner it is corrected the better.

Steve
 
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A

Alan

thehed said:
What happens if I overfund my non-deductable taditional IRA?

I have two separate accounts (one with Fidelity and one with a stand
alone mutual fund company). Looking back on paperwork I see I
selected the stand alone fund as an IRA. I funded this account with
$2500. A couple months later I set up the Fidelity account, with an
initial funding of $2500, then set up monthly transfers of $200 per
month. So I have exceed my $5000 limit by $400 so far.

What are the implications of this? Will I have to take out extra
money and pay taxes?
See pages 49 thru 52 in IRS Pub 590, Excess Contributions.

http://www.irs.gov/pub/irs-pdf/p590.pdf
 

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