Too Much in an IRA? The 6% Tax and How to Fix It
Published November 5, 2026
An IRA is a personal retirement account. Each year, the amount you can put into a traditional or Roth IRA has a limit. For 2025, the limit is $7,000. If you are age 50 or older at the end of 2025, the limit is $8,000. You also cannot contribute more than your taxable pay for the year, if that amount is smaller. Any amount over the limit is an excess contribution. IRS: 2025 Instructions for Form 5329
The 6% tax
If you leave an excess contribution in your IRA, you may owe an extra tax of 6% of the excess. The tax applies to the excess for each year it stays in the account. You figure it on Form 5329 and enter the tax on Schedule 2 (Form 1040), line 8. IRS: Publication 590-A (2025)
Form 5329 also reports other taxes on retirement and tax-favored accounts. This post covers only excess IRA contributions. IRS: About Form 5329
How to avoid the tax: withdraw the excess
You can avoid the 6% tax by withdrawing the excess contribution by the due date of your return, including extensions. Three rules apply. You do not claim an IRA deduction for the amount you withdraw. You also withdraw any earnings on that amount. And you include those earnings in your income for the year. IRS: 2025 Instructions for Form 5329, line 15
If you were under age 59½ when you withdrew the earnings, report them as an early distribution on Form 5329, line 1. Then enter exception number 21 on line 2. Exception 21 keeps the 10% early withdrawal tax from applying when the withdrawal is made by the due date. IRS: 2025 Instructions for Form 5329
Illustration only, with made-up numbers. Sam earns $20,000 of taxable pay in 2025 and is under age 50. He puts $7,000 into his IRA, which is the limit. Later he adds $500 more by mistake. That $500 is an excess. If Sam withdraws the $500, plus $30 of earnings, before his return is due, the $500 is treated as never contributed. He includes the $30 in income. If he leaves the $500 in, the 6% tax on $500 is $30.
If you missed the deadline
If you already filed your return without withdrawing the excess, you can still withdraw it. The window is up to 6 months after the due date of the return, not counting extensions. You then file an amended return with the words "Filed pursuant to section 301.9100-2" at the top. You report the earnings on that amended return and include an explanation of the withdrawal. For a 2025 return due April 15, 2026, that window closed on October 15, 2026. IRS: 2025 Instructions for Form 5329, line 15
Records to keep
Keep your IRA statements and records of every contribution, traditional and Roth. Keep any Form 5498 you receive, which reports IRA contributions. Keep copies of Form 5329, any amended return, and the paperwork for the withdrawal, including the earnings. IRS: Publication 590-A (2025)
Steps to take
- Add up all IRA contributions you made for the year, traditional and Roth together.
- Compare the total with the limit: $7,000, or $8,000 if you are 50 or older. Also check your taxable pay.
- If you are over the limit, ask your IRA provider to return the excess and its earnings before the due date.
- If you keep the excess, plan to report the 6% tax on Form 5329 and on Schedule 2 (Form 1040), line 8.
- Keep the records of the withdrawal and the earnings with your tax file.
General information, not advice about your return.
Sources: Sources: IRS, 2025 Instructions for Form 5329, Additional Taxes on Qualified Plans (Including IRAs) (https://www.irs.gov/pub/irs-pdf/i5329.pdf); IRS, Publication 590-A (2025), Contributions to Individual Retirement Arrangements (IRAs) (https://www.irs.gov/publications/p590a) This is general information, not advice about your specific return.
