IRA contributions in excess of the limit are subject to a 6% excise tax, unless the excess amount is removed by the deadline along with any net income attributable (NIA). The deadline for removing excess contributions is the individual’s tax-filing deadline, including tax filing extensions. For individuals who file their tax return on time, or file for an extension on time, an automatic 6-month extension applies. This means that individuals with a tax filing due date of April 15 can have until October 15 to correct an excess contribution. The back office for an IRA Custodian might calculate the NIA. If they do not, the instructions provided by the IRS can be used. These are available here and in IRS Pub 590-A.
Denise is CEO of Appleby Retirement Consulting Inc., a firm that provides IRA resources for financial/ tax/legal professionals. She has over 20 years of experience in the retirement plans field, which includes training and technical consultation.
Denise writes and publishes educational /marketing tools for advisors; available at http://irapublications.com. Denise co-authored several books on IRAs
Denise is a graduate of The John Marshall Law School, where she obtained a Masters of Jurisprudence in Employee Benefits, and has earned 5 professional retirement designations.
She has appeared on numerous media programs, sharing her insights on retirement tax laws.