🎯 How much would you save by correcting an IRA overcontribution?

If you have overcontributed to an individual retirement account (IRA), you should fix it as soon as possible. Any issue with automatic contributions, an income change, or a misunderstanding of the rules can easily push you over the line. This calculator helps you determine if you made an excess contribution and exactly how much the recurring IRS penalty will cost you.

The IRS announces annual contribution limits each year. For 2026, you can contribute up to $7,500 per year to your IRAs combined. There is an additional $1,100 catch-up contribution for anyone who is 50 years or older. Crucially, your total IRA contributions for the year cannot exceed your taxable compensation.

Money Com warns that the IRS charges a 6% penalty for overcontributions every year as long as it remains uncorrected. A simple $1,000 overcontribution costs $60 per year.

The fix is straightforward but time-sensitive. You typically must withdraw the excess and any earnings on it before your tax filing deadline. Let's see how much this mistake costs if you ignore it for multiple years.

For further related reading, check out:

• The 6% IRA Penalty That Hits Every Year Until You Fix an Excess Contribution