661 - What To Do If You Contribute Too Much to an HSA, IRA or 401k

Money Girl

Macmillan Holdings, LLC

Investing, Education, Business, Entrepreneurship, How To

4.6 • 1.8K Ratings

🗓️ 3 February 2022

⏱️ 20 minutes

🔗️ Recording | iTunes | RSS

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Summary

Over-contributing to various tax-advantaged accounts isn’t allowed, but can be easy to do by mistake. Laura reviews the contribution limits for various accounts and how to correct an excess so you avoid costly penalties. Read the transcript. Check out all the Quick and Dirty Tips shows. Subscribe to the newsletter for regular updates. Join the conversation on Facebook and Twitter. Links: https://www.quickanddirtytips.com/money-finance/retirement/over-contribute-to-hsa-ira-or-401k https://www.quickanddirtytips.com/podcasts https://www.quickanddirtytips.com/subscribe https://www.facebook.com/MoneyGirlQDT https://twitter.com/LauraAdams

Transcript

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0:00.0	Hello friends, I'm Laura Adams and this is the Money Girl Podcast where my mission is
0:11.0	to help you live rich and love the journey.
0:14.3	If you are ready for more knowledge, resources and motivation to manage money the best way
0:18.9	possible, you are in the right place.
0:21.4	I'm so glad that you're here and if you're a long time listener, you know what we do.
0:25.4	We cover kind of like a mini training every episode.
0:29.1	It's a wide variety of topics that we touch on, maybe credit, debt, investing, real estate,
0:34.6	business, taxes, insurance, money management strategies, and lots more.
0:39.2	If you have just found the show, I'm so glad that you're here and I hope you'll stick around
0:43.9	by subscribing.
0:45.4	Today's show was inspired by Amanda M. who says,
0:50.1	I contributed to my Roth IRA for 2020.
0:53.5	But now I realize that my income will exceed the allowable annual limit.
0:59.0	And I fix this error and use the money to contribute to a traditional IRA instead.
1:04.5	Or do I have to pay the penalty?
1:07.3	Thanks for your question Amanda and congratulations on earning too much to qualify for a Roth IRA.
1:14.2	That is a significant milestone that I'll explain in this show.
1:18.1	One important thing to know about various tax-advanced accounts such as retirement accounts,
1:24.2	savings accounts, and 529 college savings accounts, over contributions are not allowed.
1:31.0	But they can be really easy to do by mistake.
1:34.9	I have over contributed to all of these accounts at some point and can tell you that it is
1:41.2	easy to get them fixed for the most part, but you have to do it in a timely manner.
	...

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