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Personal Finance

Excess IRA Contributions: How to Fix Them

Natalie Choate

The Tax Code gives IRA owners a limited time to take back their IRA contributions. You can use such a "corrective distribution" to avoid a penalty for an excess IRA contribution. You can also use it when you simply change your mind about an IRA contribution you've made.

What if you made an excess contribution but miss the deadline for the penalty-free cleanup? You still need to "fix it," but the method and timing are different.