If your contributions to a Traditional IRA, Roth IRA, or Health Savings Account (HSA) exceed the allowed limit for the year, an additional tax may apply. This tax is calculated and reported on Form 5329. If you need help accessing Form 5329, go to our Form 5329 - Entering in Program FAQ.

IRA (Traditional and Roth)

An excess contribution occurs when total contributions across all Traditional and Roth IRAs exceed the lesser of:

• The annual contribution limit, or
• Taxable compensation for the year

If an excess contribution is not corrected, a 6% excise tax may apply for each year the excess remains in the account. This tax is reported on Form 5329.

Common ways excess contributions are addressed include:

• Withdrawing the excess contribution by the tax filing deadline (including extensions).
• Withdrawing any earnings associated with the excess.
• Recharacterizing the contribution (for example, from Roth to Traditional IRA), if eligible.

Earnings on excess contributions:

• Generally included in taxable income.
• May be subject to an additional 10% tax if withdrawn early0

HSA

Excess HSA contributions are also subject to a 6% annual excise tax until corrected. This is reported on Form 5329.

Common ways excess contributions are addressed include:

• Withdrawing the excess contribution by the tax filing deadline (including extensions).
• Withdrawing any earnings associated with the excess.

Earnings on excess contributions:

• Generally included in taxable income.
• Not subject to the 10% additional tax when withdrawn as part of a correction.

Important Notes

• If the excess is not corrected by the filing deadline, the 6% tax may apply for that year and may continue in future years.
• Excess contributions may be applied to a future year, if contribution limits allow.
• Contributions made before the filing deadline may apply to either the current or prior tax year, depending on designation.
• IRS contribution limits and rules may change annually; refer to current IRS guidance when filing.