Make a change to an IRA contribution

Q: Can I provide Fidelity with my own earnings calculation?

Yes, you have the ability to provide your own earnings calculation when you submit your return of excess request online. You can find information on the earnings calculation in Worksheet 1-4 in IRS Publication 590-A.

Q: Are the earnings on my timely return of excess request subject to a 10% early withdrawal penalty if I am younger than 59½?

No, the SECURE 2.0 Act of 2022 removed the 10% early withdrawal penalty on earnings removed with excess and nondeductible contributions for IRA owners under 59½. However, earnings must be included in income in the year the excess or nondeductible contribution was deposited into your IRA.

Q: If I request a return of excess, where does my money go?

If you elect to remove your excess contribution, you can transfer the money to a nonretirement brokerage account, transfer it to a linked bank account using electronic funds transfer (EFT), or receive a check.

Q: Can I transfer shares of stock or mutual fund shares to my Fidelity nonretirement account to fix my excess contribution?

No. Fidelity requires withdrawals for excess contributions to be withdrawn from a core position or money market holding in your account.

Made an IRA contribution that doesn't fit your eligibility or tax situation? Recharacterizing or returning excess contributions can save you money―and headaches―on your taxes. We're here to help.

Why you may need to change an IRA contribution

Reviewing and adjusting your contribution now can help you avoid unexpected taxes or penalties later.

Stay within IRS rules

Avoid penalties by fixing contributions that exceed annual limits or don’t meet eligibility requirements.

Adjust to your tax situation

Update contributions if changes to your income or deduction eligibility for the year affect how they’re treated.

Correct an error

If funds were rolled over from an old workplace plan into an IRA you’re ineligible to contribute to, you may need to remove those funds.

Ways to correct an IRA contribution

Depending on your situation, there are a few different ways you can make a change to your IRA contribution.

Ways to correct an IRA contribution

Depending on your situation, there are a few different ways you can make a change to your IRA contribution.

Start a recharacterization

If you’ve made a Roth IRA contribution and want to switch it to a traditional IRA contribution (or vice versa), you may be able to do so—we’ll walk you through it.

Withdraw an excess contribution

We can help you determine how much to withdraw and explain how the IRS may treat the withdrawal based on when you act.

Apply a contribution to a future year

If your income changes, applying an excess contribution to a future year may help—but it’s subject to a penalty and important considerations.

Option 1: Start a recharacterization

Let's say you've made a wise retirement move and contributed to a Roth or traditional IRA. But you've changed your mind and want to reclassify it as a contribution to the other type of IRA. Recharacterizing is an option if the tax-filing deadline (plus extensions) for the year your contribution applied to hasn't passed yet.

5 things to know before you start a recharacterization

Earnings & losses must be included for the IRS

When you recharacterize a contribution, the IRS requires any gains or losses to be included in the amount moved.

Earnings are based on the change in value of your entire account, not just the original contribution
The final amount may be higher or lower than what you contributed, depending on how your IRA investments performed
Fidelity does this calculation for you

Start a recharacterization

Option 2: Withdraw an excess contribution

The amount you need to withdraw from your IRA for a correction―and the way the IRS treats it―depends on whether you withdraw the excess before the tax deadline (a timely correction) or after the tax deadline (untimely correction). Here’s how each works:

Timely correction: Before the tax deadline, plus extensions

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. Fidelity will do the math for you.

If your account increased in value after your excess contribution, the amount you need to withdraw may actually be higher than the amount you contributed, based on your earnings
If your account decreased in value after your excess contribution, the amount you withdraw may be less than your original contribution amount
You have until the tax-filing deadline to complete a timely return of excess. If you file an IRS extension, you have until the extended tax-filing deadline, normally October 15
Fidelity will create IRS Form 1099-R for the excess contribution in the year it’s withdrawn, indicating whether it applies to the current or prior year

Withdraw excess

Option 3: Apply a contribution to a future year

Let's say you're ineligible to contribute in a particular year due to higher income than expected―but you expect your income to revert to normal the next calendar year. In that case, applying your contribution to a future year might make sense. The excess amount you choose to apply to future years is subject to a 6% penalty.

You can learn more about applying your contribution to future years in IRS Publication 590-A. We suggest working with a tax advisor to make sure this option is right for you.

IRS Publication 590-A (PDF)

Learn more about contributing to an IRA

What happens if you overcontribute to an IRA?

Here are your options for excess IRA contributions.

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5 min

Backdoor Roth IRA: Is it right for you?

A backdoor Roth IRA could benefit high-income earners.

Article

8 min

Understand IRA contribution limits

Find out how much you can contribute each year based on your age, income, and account type.

Check limits

Questions about IRA contributions?

We can help you find the answers.

800-343-3548

Frequently asked questions

Can I provide Fidelity with my own earnings calculation?

Can Fidelity calculate my earnings if I made my contribution at another IRA provider and transferred my account to Fidelity?

No. Fidelity can only provide earnings calculations while your contribution was in your Fidelity traditional or Roth IRA. Since the return of excess process requires the earnings calculation from the date of deposit, you’ll need to work with your former IRA provider to calculate your earnings. You can also use Worksheet 1-4 in IRS Publication 590-A to calculate earnings while your contribution was with your former IRA provider.

Are the earnings on my timely return of excess request subject to a 10% early withdrawal penalty if I am younger than 59½?

If I request a return of excess, where does my money go?

Can I transfer shares of stock or mutual fund shares to my Fidelity nonretirement account to fix my excess contribution?

Screenshots are for illustrative purposes only.

Fidelity does not provide legal or tax advice. The information herein is general in nature and should not be considered legal or tax advice. Consult an attorney or tax professional regarding your specific situation.

Section 333 of the SECURE 2.0 Act of 2022 eliminated the 10% early withdrawal penalty on earnings for excess contributions removed using the timely correction method.

The recharacterization earnings calculation is designed to make your account look like your contribution was never deposited. The calculation is based on the performance of your entire account and not individual investments. For example, if your contribution remained in cash the entire time it was in your account, and you also hold investments in your account that increased or decreased in value, the amount that is recharacterized will be higher or lower than your original deposit, even though your deposit was never invested.

Fidelity Brokerage Services LLC, Member NYSE, SIPC, 900 Salem Street, Smithfield, RI 02917

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Make a change to an IRA contribution

Why you may need to change an IRA contribution

Update contributions if changes to your income or deduction eligibility for the year affect how they’re treated.

If funds were rolled over from an old workplace plan into an IRA you’re ineligible to contribute to, you may need to remove those funds.

Ways to correct an IRA contribution