How do I report my excess contributions to my IRA?

Contributing to an IRA can be a great way to save for retirement, but if you contribute more than you're allowed, you may owe an additional tax. The IRS calls this an excess contribution, and it can apply to either a Traditional IRA or a Roth IRA.

If you have excess contributions, you may need to complete Form 5329, Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts to calculate any penalty tax due.

IRA Contribution Limits

Your total contributions to all of your Traditional and Roth IRAs combined generally cannot exceed the annual IRA contribution limit or your taxable compensation for the year, whichever is less.

Tax Year 2026

• $7,500 if under age 50
• $8,600 if age 50 or older
• Or your taxable compensation for the year, if lower

Tax Years 2024 and 2025

• $7,000 if under age 50
• $8,000 if age 50 or older

Tax Year 2023

• $6,500 if under age 50
• $7,500 if age 50 or older

Tax Years 2021 and 2022

• $6,000 if under age 50
• $7,000 if age 50 or older

What Happens If I Contribute Too Much?

If you contribute more than the allowed amount for the year, or if you carried forward an excess contribution from a prior year, you may owe an excess contribution penalty.

This can happen when:

• Your total IRA contributions exceed the annual limit
• Your income makes you ineligible for some or all Roth IRA contributions
• Excess contributions from a prior year were not corrected
• You accidentally contribute to multiple IRAs that exceed the combined limit

What Is the Excess Contribution Penalty?

The IRS generally imposes a 6% excise tax on excess IRA contributions.

Keep in mind:

• The penalty applies for each year the excess remains in the account.
• The penalty continues until the excess is corrected or absorbed by future contribution limits.
• The total penalty cannot exceed 6% of the combined value of all your IRAs at year-end.

How Do I Report Excess Traditional IRA Contributions?

If your excess contribution was made to a Traditional IRA, complete Part III of Form 5329.

In TaxSlayer, navigate to:

1. Federal
2. Other Taxes
3. Additional Taxes on Qualified Plans and Other Accounts
4. Complete Part III

Information You'll Need

Excess Contributions From Prior Year

Enter any excess contribution carried forward from the previous year. This amount is generally found on line 16 of your prior-year Form 5329.

Contribution Credit

Enter the difference, if any, between:

• Your allowable IRA contribution limit, and
• Your total Traditional and Roth IRA contributions for the current year

This amount may reduce previously reported excess contributions.

Current-Year Traditional IRA Distributions Included in Income

Enter any distributions from Traditional IRAs that are included in your taxable income.

Do not include returned excess contributions reported separately.

Current-Year Distribution of Prior-Year Excess Contributions

Enter any prior-year excess contributions that were returned during the current tax year.

If you're correcting an earlier excess contribution, review the applicable Form 5329 instructions for additional guidance regarding returned contributions.

Current-Year Excess Contributions

Enter any Traditional IRA contributions that exceed your allowable contribution limit and were not withdrawn by the applicable deadline.

Do Roth IRA Contribution Limits Depend on Income?

Yes.

Unlike Traditional IRAs, Roth IRA eligibility is subject to income limits. As your income increases, the amount you can contribute may be reduced or eliminated.

2026 Roth IRA Income Phase-Out Ranges

How Roth IRA Phase-Outs Work

• Below the phase-out range: You can generally contribute the full amount.
• Within the phase-out range: Your allowable contribution is reduced.
• Above the phase-out range: You generally cannot make a direct Roth IRA contribution.

If you contribute more than your permitted amount because of income limitations, the excess may be subject to the 6% penalty unless corrected.

How Do I Report Excess Roth IRA Contributions?

If the excess contribution was made to a Roth IRA, complete Part III of Form 5329.

In TaxSlayer, go to:

1. Federal
2. Other Taxes
3. Additional Taxes on Qualified Plans and Other Accounts

Information You'll Need

Excess Contributions From Prior Year

Enter any excess Roth IRA contributions carried forward from the prior year. This amount is generally shown on line 24 of your prior-year Form 5329.

Contribution Credit

Enter the difference, if any, between:

• Your allowable contribution limit, and
• Your total Traditional and Roth IRA contributions for the current year

This amount may help reduce prior-year excess contributions.

Current-Year Roth IRA Distributions

Generally enter:

• The amount from Form 8606, line 19, plus
• Any qualified Roth IRA distributions

If you withdrew the entire balance of all Roth IRAs during the year, special rules may apply.

Current-Year Excess Roth IRA Contributions

Enter the excess of your Roth IRA contributions over your allowable contribution limit, unless the excess was withdrawn by the applicable deadline.

Can I Fix an Excess IRA Contribution?

Often, yes.

Common correction methods include:

• Withdrawing the excess contribution before the tax filing deadline
• Applying the excess toward a future year's contribution limit
• Recharacterizing a contribution when eligible under IRS rules

The best option depends on your situation, the type of IRA involved, and whether any earnings are associated with the excess contribution.