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Subject Author Date
Overfunding a non-deductible Traditional IRA thehed 09-03-2008
Posted by thehed on September 3, 2008, 1:23 pm
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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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Posted by Steve Pope on September 3, 2008, 1:45 pm
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>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

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>

Posted by Alan on September 3, 2008, 2:52 pm
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thehed wrote:
> 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

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>

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