Skip to main content
No. of Recommendations: 0
Greetings, Helen, and welcome. You asked:

<<My husband will be funding his SEP-IRA at the end of this year (for 1999). He is not sure exactly how much he can contribute tax deductable. So he will be making an educated guess. Here's the question:

If he over contributes (he'll find this out once he does our taxes next year)to the SEP-IRA, what are the ramifications? Meaning the extra money, does it have to be removed from the account? Is the extra money now taxed? And lastly, can that extra money stay in the SEP-IRA accurring gains tax-deferred?>>

To avoid any penalty, the excess contributions and any earnings thereon must be removed from the SEP-IRA prior to 4/17/00 (4/15 falls on a Saturday next year, so you get two extra days before your return is due). If not done before then, the excess contribution will be penalized 6% for 1999 and for each and every subsequent tax year the excess remains in the account. He may, though, pay the 6% for 1999 and use the excess as part of his allowable contribution for 2000. Alternatively, he may leave the excess in the IRA and call it part of his allowable non-SEP (or traditional) IRA contribution for 1999. He's still allowed that contribution in addition to his SEP-IRA, but it probably won't be deductible because of the AGI limits for same. For details, you should get and read IRS Publication 590, Individual Retirement Arrangements, available at

Print the post  


The Retirement Investing Board
This is the board for all discussions related to Investing for and during retirement. To keep the board relevant and Foolish to everyone, please avoid making any posts pertaining to political partisanship. Fool on and Retire on!
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.