Return of excess IRA contributions

Have you contributed to your Traditional or Roth IRA and found out you're not eligible? Correcting this contribution error the proper way can save you money―and headaches―on your taxes. We're here to help.


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How we can help

Good news: To satisfy the IRS when correcting an excess IRA contribution, you have options. However, no matter which path you choose, one thing is certain: You'll need to report it correctly when you file your taxes.


When you start a return of excess online with Fidelity, our team will calculate any earnings or losses, create proper tax reporting, and distribute the appropriate return amount to you, making life easier for you and your accountant.


As always, it's a good idea to review your situation with a qualified tax advisor. You can find additional information on excess contributions in IRS Publication 590-A (PDF) and the instructions for IRS Form 5329 (PDF).

Reasons for excess IRA contributions 

  • Income limits

    Earning too much income―or none at all―are the most common reasons for excess Traditional and Roth IRA contributions. To be eligible to contribute, you first need to have earned income. But your income can't be too high, for a Roth IRA, or you may not be able to deduct your contribution in a Traditional IRA.

    View income limits for Traditional IRAs and Roth IRAs

  • Annual contribution limit

    Depositing too much money is another common, correctable mistake. Across all your Traditional and Roth IRAs, the annual contribution limit for 2022 is $6,000, or $7,000 if your age 50 or older. For 2023, the limit increases to $6,500, or $7,500 if you're age 50 or older.

  • Ineligible Rollover

    Rolling money into your Traditional, Roth, Rollover, SEP or SIMPLE IRA, that was not eligible to be treated as a rollover, may also require you to follow the return of excess process.

What are my options if I have an excess contribution?

You have 3 options for correcting an excess contribution. Let's break them down and help you find the right choice for your situation.


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Option 1: Withdraw my excess amount

Withdrawing the excess money from your IRA is one option. But determining how much you need to withdraw―and how the IRS will treat your withdrawal tax-wise―depends on whether you're correcting your error before or after the tax-filing deadline (plus extensions) in the year you made the excess contribution.

  • Timely correction: Before the tax deadline

    A timely correction is a withdrawal before the tax-filing deadline (plus extensions) in the year you made the excess contribution

    When you make a timely correction, any earnings or losses in your IRA need to be factored into the withdrawal and reported to the IRS. Two important facts to understand:

    • If your account INCREASED in value after your excess contribution, any earnings on your excess contribution must be calculated, withdrawn, and reported as taxable income in the year the contribution was made. Keep in mind: If your IRA increased in value, the amount you need to withdraw will actually be higher than the amount you contributed.
    • If your account DECREASED in value after your excess contribution, the amount you withdraw will be less than your original contribution amount. 

    View earnings calculation

    Note: If you are withdrawing a non-deductible contribution to a Traditional IRA, you MUST make a timely correction before the tax-filing deadline (plus extensions) in the year the excessive contribution was made.

    Tax reporting of a timely correction
    Timely corrections must be reported in the year of the withdrawal on IRS Form 1099-R (Box 7 will let the IRS know whether you're making a correction to a contribution made in the current or previous calendar). Any earnings on your withdrawal will be reported as taxable on the 1099-R. For more information on how to report a timely correction, see the instructions for IRS Form 1040, 5329, and 8606.

    Make life easier on yourself
    When you start a return of excess with Fidelity, we'll do the math for you, calculating any earnings or losses, creating special tax reporting, and distributing the appropriate return amount to you.

  • Untimely correction: After the tax deadline

    An untimely correction is a withdrawal made after the tax-filing deadline (plus extensions) in the year you made the excess contribution.

    With untimely corrections, the IRS does not require an earnings calculation―you simply withdraw the amount of the excess contribution. However, untimely corrections are subject to a 6% excise tax each year the contribution remains in the account.

    Two situations to note when it comes to untimely corrections and taxes:

    • If your income was too high or too low to contribute, the amount you withdraw is not taxable.
    • If you exceeded the annual contribution limit, the amount you withdraw will be taxable in the year of the withdrawal.

    Tax reporting of untimely corrections
    Untimely corrections must be reported as an early or normal withdrawal, depending on your age when you withdraw, using IRS Form 1099-R. For more information on reporting untimely corrections, see the instructions for IRS Form 1040, 5329, and 8606.

What do I need to know before I begin the return of excess process?

  • Return of excess form
    If you decide that withdrawing your excess contribution is the best way to correct your error, completing Fidelity's online return of excess form is the best way to initiate your withdrawal.
  • Selling investments
    When you submit a return of excess form, you must have enough cash in your account in order for Fidelity to process your withdrawal. You may need to sell an investment in your account to generate cash.
  • Taxes
    If you are removing an excess contribution using the timely correction method, you are required to remove your original contribution plus earnings. The earnings must be included on your tax return in the year you made the excess contribution.
  • Tax withholding
    If you elect tax withholding on a timely correction of an excess contribution, taxes will only be withdrawn from the earnings portion of your withdrawal.
  • Tax reporting
    Your excess contribution will be reported as a withdrawal on IRS Form 1099-R in the year the excess contribution is withdrawn from your account.

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Option 2: Carryforward your contribution

A carryforward allows you to apply your excess contribution as a future year's IRA contribution. This option might make sense if, for example, you received a one-time annual bonus that made you ineligible to make a Roth IRA contribution in a particular year, and your income and contribution eligibility are going to return to normal for the next calendar year.

For more information on the carryforward process, see IRS Publication 590-A (PDF) and the instructions for IRS Form 5329 (PDF).



Tax reporting of a carryforward
When you carryforward your excess contribution to future years, you'll report it on IRS Form 5329 (PDF) when you file your tax return. You will not receive a tax form to report the transaction in your Traditional or Roth IRA.

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Option 3: Start a recharacterization

A recharacterization allows you to reclassify your original contribution―meaning, you could switch it from a Roth IRA contribution to a Traditional IRA contribution, or vice versa. This may make sense if you made:

  • An excess contribution to your Roth IRA
  • A non-deductible contribution to your Traditional IRA because your income is too high

Before recharacterizing a non-deductible Traditional IRA contribution to a Roth IRA, first doublecheck that you meet the income limits for a Roth IRA contribution. If you're recharacterizing an excess Roth IRA contribution to a Traditional IRA, you'll want to check whether you can deduct your contribution.


The recharacterization process uses the same earnings calculation as a timely return of excess. When the transfer is ultimately made between your IRA accounts, it can be done in cash or as shares in kind. The deadline to complete a recharacterization is tax-filing deadline (plus extensions) for the year your contribution is for.


View income limits for Traditional IRAs and Roth IRAs



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