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Greetings, John, and welcome. You asked:

<<I'm considering a self-directed IRA using an on-line discount broker. What happens if I accidentally exceed the $2,000 per year investment limit? Whose responsibility is it to make sure IRA contribution limits are followed? Do over-contributions simply lose their "most favored tax status" and adjustments are made at tax time?>>

It is your responsibility to ensure you make no excess contributions to an IRA during the year. You have until the date your income tax return for the year is due (i.e., April 15 for most folks) to withdraw the excess plus any earnings thereon without penalty. If you do so, there is no penalty; however, you will have to declare the earnings as income plus pay a 10% penalty on those earnings. If you fail to withdraw the excess contributions and earnings on time, then you will be penalized 6% on the excess contribution. That 6% penalty will apply every year thereafter until the excess is removed from the IRA. See IRS Publication 590, Individual Retirement Arrangements, for details. You can download that publication at .

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