Tax: What is an excess contribution?

An excess contribution is a contribution to a Traditional or Roth IRA that is not permitted or that is larger than is permitted. For example, if the total amount of your contributions to one or more Roth and Traditional IRAs exceeds the annual limitation, if your total annual contributions exceed your taxable compensation income for the year or if your permitted Roth contribution was reduced or eliminated because of the size of your modified adjusted gross income. Other factors may also result in an excess contribution. Refer to IRS Publication 590 and consult your tax advisor. 

IRS Circular 230 Notice: The information contained in this FAQ is provided for information purposes only, is not intended to constitute tax advice which may be relied upon to avoid penalties under any federal, state, local or other tax statutes or regulations and does not resolve any tax issues in your favor. Refer to IRS Publication 590, Individual Retirement Accounts for additional information on IRAs in general and consult your tax advisor about your individual tax situation.