Save Too Much? Fix Excess Retirement Contributions Penalty-Free
Money Girl
Macmillan Holdings, LLC
4.6 • 1.8K Ratings
🗓️ 18 March 2026
⏱️ 16 minutes
🧾️ Download transcript
Summary
1004. This week, Laura explains how to identify and fix overcontributions to your 401(k), IRA, and HSA. You’ll learn the specific deadlines for 2026 to remove excess funds penalty-free and how to handle the tricky tax paperwork that follows.
In This Episode:
- The Cost of Mistakes: Why IRAs and HSAs carry a 6% annual penalty for excess funds, and how 401(k) errors can lead to double taxation.
- 2026 Contribution Limits: The max limits for workplace plans ($24,500), IRAs ($7,500), and HSAs ($4,400–$8,750), including catch-up rules for those over 50 and 60.
- Common Pitfalls: How switching jobs, receiving year-end bonuses, or earning too much for a Roth IRA can trigger an accidental overcontribution.
- The Correction Timeline: Why April 15 is a hard deadline for workplace plans, while IRAs and HSAs offer flexibility until October 15 with an extension.
- New 2026 Rules: What high earners (making over $150k) need to know about the new mandatory Roth catch-up contributions.
Step-by-Step Fixes: How to work with your account custodian to calculate earnings (or losses) and file the correct tax forms (1099-R, 1099-SA).
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Transcript
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| 0:00.0 | Could you accidentally have saved too much in your retirement or health accounts? |
| 0:11.1 | Saving too much might not seem like a problem to worry about, but there is a downside to |
| 0:15.6 | exceeding annual contribution limits for tax-advantaged accounts, like a workplace retirement plan, IRA, or |
| 0:23.0 | HSA, and that's paying penalties. |
| 0:26.8 | So this podcast will review how to fix common contribution errors so you avoid penalties |
| 0:33.9 | and pay as little tax as possible. |
| 0:36.9 | Plus, I'll review why over contributing can |
| 0:40.4 | actually be easy to do and tips for avoiding it. Welcome back to episode 1004 of Money Girl. |
| 0:47.3 | I really appreciate you downloading the show and spending some time with me. I'm Laura Adams, |
| 0:51.8 | an award-winning author, spokesperson, money speaker, and I'm the founder of |
| 0:57.0 | the Money Stack. That's my sub-stack newsletter. Free subscribers automatically receive my money |
| 1:02.8 | success toolkit, which includes the exact templates I use to manage my finances. So I hope you'll |
| 1:09.8 | check that out. You can learn more, ask your money |
| 1:12.5 | questions, and sign up for the money stack for free at laura d adams.com. You can also |
| 1:19.3 | leave a voice message with your question or comment by calling 302-364-0308. I'd love to feature your question on Finance Friday. |
| 1:30.7 | That's our weekly Q&A bonus edition of the show. |
| 1:34.8 | All right, so let's talk about over-contribution penalties. |
| 1:39.1 | Catching and correcting an over-contribution to any kind of tax-advantaged account as quickly as possible |
| 1:46.8 | is critical. That's because you're violating IRS rules and will have to pay expensive penalties |
| 1:53.9 | unless you remove the excess funds by a deadline. We'll talk more about how to do that. For IRAs and HSAs, the IRS imposes |
| 2:05.0 | a 6% penalty for every year that an excess remains in your account. For example, let's say you |
| 2:13.3 | over-contribute $1,000 to an IRA this year, and you don't correct it. In that case, you've got to |
... |
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