The Bottom Line: What happens if I overfund my IRA?

Comments: 10

Tiffany G. Apr 4, 2008, 9:07pm EDT

hmm.. thanks for sharing!

Ms. Meacham: Money Maven Apr 5, 2008, 3:49pm EDT

; ) Joanna. Over contributing to an IRA is a viable option for covering expenses a self-directed IRA has, like real estate, without having to take out a more expensive IRA non-recourse loan. There's a 6 percent charge for over contributions, while the loan runs around 8 percent plus capital gains tax on any of the associated gains.

Hope this got yuo thinking Tiffany D. This is actually a problem for more people than you might think, since the amount a person can contribute to an IRA is limited by their income and other retirement plan contributions each year, from what I understand. Sometimes, at the end of the year, they discover that their 401(k) contributions made some of their IRA contributions taxable, bringing the above scenario into play.

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Jo C. Apr 6, 2008, 4:46pm EDT

This was fascinating to learn. On a very mini economics scale, I asked a question of a store that had a potentially misleading ad. I listed my results in a recent article. In short, by asking a question the store arbitrarily gave us 30% off their "already 30% off" items, leading me to wonder about the truth in advertising and bartering system in retail stores today. We didn't try to barter but I did ask a question.

Basically, what would have cost us over $320 if I kept my mouth shut yesterday, cost about $246 today, including tax. How many people would just pay yesterday's price and not save the money to STIMULATE our economy elsewhere?

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Jo C. Apr 6, 2008, 10:51pm EDT

You have just been shamelessly self-promoted in my latest article but do read the comments, too,..... a few of them. I had to go back in and put in the links I tried to put in the first time.

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debra g. Apr 7, 2008, 8:11pm EDT

A great article I hope that my kids will get their IRA's up to the money limit for them this year.
Thank you for your comment on my dayliliy article,do visit again and I return comments I'm just sometimes a little slow.

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Ms. Meacham: Money Maven Apr 7, 2008, 8:16pm EDT

Thank you J. Corn for making huge props to the Frugal Eats group and The Bottom Line series of practical tips for saving and making money in today's economy. I love catching up on your posts, even when they don't mention me. ; )

No problem debra g. I enjoyed checking out the progress of the landscaping in your yard. Thanks for the comment on IRAs too. Here's crossing my fingers for your kids....

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Dana H. Apr 9, 2008, 1:38am EDT

Does this work the same for a ROTH IRA?

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Susan L. Apr 9, 2008, 10:44pm EDT

I actually had this happen to me for 2007. I changed jobs and should have informed them at my new job of how much I had already contributed so they could stop deducting when I hit the max. I had carefully calculated how much I needed out of each check to get in the max, but failed to take a year-end bonus into the mix! (I know, everyone should have that problem.) That threw me over the maximum allowable deductions. Sigh. Got it straightened out, but could have just taken care of it from the beginning my informing them of how much I had already put in for the year at my other job.

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Karen G. Sep 6, 2008, 3:56pm EDT

I dont see overfunding my IRA to be a personal problem for me,lol.

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The Bottom Line: What happens if I overfund my IRA?

Comments: 10

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