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I put a bit more than $2,000 into an IRA this past year. I thought that amounts over $2,000 were simply non-deductable, but now I think I'm liable for a 6% tax on excess contributions.

Can someone tell me if I could withdraw the amount over $2,000 before April 17 and avoid the excess contributions tax? Would I instead be hit up with a 10% excise tax on IRA withdrawals?

Thanks, y'all!
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Greetings, Yaguri, and welcome. You wrote:

<<I put a bit more than $2,000 into an IRA this past year. I thought that amounts over $2,000 were simply non-deductable, but now I think I'm liable for a 6% tax on excess contributions.

Can someone tell me if I could withdraw the amount over $2,000 before April 17 and avoid the excess contributions tax? Would I instead be hit up with a 10% excise tax on IRA withdrawals?>>


If you withdraw the excess plus any earnings thereon since it has been in the account no later than April 17, 2000, then you will avoid the 6% excess contribution penalty. You will be taxed on the earnings, though, and penalized 10% on those earnings if you are younger than age 59 1/2. Your IRA custodian should be able to help you determine how much earnings are applicable to the excess. For details, see IRS Publication 590 (Individual Retirement Arrangements) which is available for download at http://www.irs.ustreas.gov/prod/forms_pubs/index.html.

Regards..Pixy
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