Reminder: The Time to Correct Your 2023 IRA Contribution Errors is Now

The deadline for correcting mistakes in IRA contributions is October 15 of the year following the contribution year (the extended tax filing deadline). Taxpayers can correct many different types of mistakes. For example, some taxpayers may have learned that their income for the tax year was too high after making a Roth IRA contribution. Some clients change their minds or discover that they contributed too much. Taxpayers can fix these errors by either recharacterizing the contribution or withdrawing the erroneous amounts. The net income attributable to (or earnings on) the contribution must also be recharacterized or withdrawn. In calculating net income attributable, an IRS formula is used (the IRA custodian will often perform the calculation). When amounts are withdrawn, the contribution itself is not taxable, but the earnings are taxable (no penalty will apply). Recharacterizing means that the amounts are converted to another type of account (for example, from a Roth to a traditional IRA if the taxpayer's earnings were too high to contribute directly to the Roth). For more information on the penalty for excess IRA contributions, visit Tax Facts Online. Read More: Link to Q3669.