Roth IRA Contribution Over the Income Limit: 6% Tax and Fixes

If you made a Roth IRA contribution over the income limit, the IRS charges a 6% excise tax on the excess amount every year it stays in the account, and the clock doesn’t stop until you correct it. For 2026, direct Roth contributions phase out between $153,000 and $168,000 of modified adjusted gross income (MAGI) for single filers, and between $242,000 and $252,000 for married couples filing jointly.¹ Contributions above those ceilings are excess contributions, and you have three ways to fix the problem before the penalty compounds.

How to Tell If Your Contribution Was Actually Excess

Three situations create an excess Roth contribution: your MAGI came in higher than you expected, you contributed more than the annual dollar cap, or your earned income for the year was less than what you contributed. The income trigger is the one that catches most people, because MAGI usually isn’t clear until you’re finishing your tax return months after the money went in.

MAGI is not the AGI line on your Form 1040. It adds back certain deductions, including traditional IRA deductions, student loan interest, foreign earned income exclusions, and excluded employer-provided adoption benefits.² Someone whose AGI sits just under the threshold can have a MAGI that lands squarely in the phase-out range or past it.

Inside the phase-out range, you’re allowed a reduced contribution, calculated by scaling your limit down proportionally as your income rises through the range.³ Anything above that reduced limit is excess. A single filer with a 2026 MAGI of $170,000 who contributes the full $7,500 has made a $7,500 excess contribution, because $170,000 sits above the $168,000 ceiling entirely.

For 2026, the base contribution limit is $7,500, with an $1,100 catch-up for people 50 and older, bringing their cap to $8,600.¹ Your contribution also can’t exceed your earned income for the year. Earned $4,000? That’s your ceiling, no matter what the general limit says.

A quick note on filing status: if you’re married filing separately and lived with your spouse at any point during the year, your phase-out range is $0 to $10,000. The rules are considerably harsher than for other statuses.

The 6% Excise Tax

The penalty for an uncorrected excess is a 6% excise tax, imposed every year the money remains in the Roth IRA.⁴ A $7,500 excess produces a $450 bill for the first year. Leave it, and you owe $450 again the next year, and the next. The statute caps the penalty at 6% of the year-end account value, but for most people with meaningful balances, the cap doesn’t help.

You report and pay the tax on Form 5329, filed with your regular return. Part IV of that form covers excess Roth contributions specifically.⁵ You have to file Form 5329 for every year the excess remains, even if it’s the same untouched amount carrying forward. Unpaid balances also accrue interest that compounds daily at the federal short-term rate plus three percentage points.⁶

Three Ways to Fix It

You have three options. Two require action before your tax-filing deadline (including extensions). The third works after the deadline but has a price.

Withdraw the Excess and Its Earnings

The cleanest fix is pulling the excess out of the account along with any earnings it produced while sitting there. Your custodian calculates the earnings using a formula that compares the account’s value just before your contribution to its value just before the withdrawal. That figure is the net income attributable, or NIA, to the excess.⁷

The excess contribution itself comes back tax-free, because it was after-tax money to begin with. The NIA is taxable income for the year the original contribution was made. If you’re under 59½, the NIA also gets hit with a 10% early withdrawal penalty.⁸ If the account lost money during the holding period, the NIA is negative, you withdraw less than you put in, and there’s no tax on the earnings because there aren’t any.

The deadline is your tax return due date, including extensions. An extension typically pushes it to October 15.⁵ If you already filed on time without correcting the excess, you get a separate six-month window after the original April due date. To use it, you file an amended return with “Filed pursuant to section 301.9100-2” written at the top.⁷

Recharacterize to a Traditional IRA

Recharacterization treats the contribution as if it had gone to a Traditional IRA from the start. The custodian moves the contribution plus any earnings to a Traditional IRA through a trustee-to-trustee transfer. The two amounts have to move together.⁹

This is useful when you don’t want the money leaving retirement accounts entirely. Whether the recharacterized amount ends up being a deductible Traditional IRA contribution depends on your income and whether you’re covered by a workplace retirement plan. If it’s nondeductible, you report it on Form 8606 to establish cost basis in the Traditional IRA.¹⁰ You also attach a statement to your return explaining what you did.

The deadlines mirror those for withdrawal: the return due date including extensions, or six months after the original due date if you already filed on time. One boundary worth naming: you can recharacterize a contribution, but you cannot recharacterize a Roth conversion. Conversions are permanent.⁹

Carry the Excess Forward

If you miss both deadlines, or you’d rather leave the money in the Roth, you can apply the excess against next year’s contribution limit. The money stays put, and the excess counts toward what you’re allowed to contribute in the following tax year.⁷

This only works if you’ll be eligible to contribute the following year and have room under that year’s limit. If your income is going to keep you above the threshold, the excess has nowhere to go. And you still owe the 6% excise tax for the year the excess was made. The carry-forward stops the penalty going forward; it doesn’t erase the original-year penalty. You report the carry-forward on Form 5329 for both years.

What Happens If You Never Fix It

The recurring 6% is the visible cost. The bigger problem is the statute of limitations. The IRS normally has three years from the date you file a return to assess additional tax. Form 5329 is the return for this particular excise tax, and if you never file it, the clock never starts. The IRS can assess the unpaid penalty at any time, with no expiration.¹¹

Someone who made a $7,500 excess contribution and ignored it for ten years would owe 6% for each of those years, or $4,500 in excise taxes alone, plus compounding interest on every unpaid year. The IRS can assess all of it whenever it discovers the problem. Filing Form 5329 and paying the tax, even late, at least starts the limitations period and caps your exposure.

The Backdoor Roth for Future Years

If your income keeps you above the direct-contribution ceiling, the backdoor Roth strategy is the standard workaround. You make a nondeductible contribution to a Traditional IRA, which has no income limit for contributions (only for deductions), and then convert that Traditional IRA balance to a Roth.³ Because you’re using after-tax dollars, the conversion should be tax-free or nearly so.

The word “should” carries the weight in that sentence, because the pro-rata rule can turn a supposedly tax-free conversion into a partly taxable one. The IRS treats all your Traditional, SEP, and SIMPLE IRA balances as one combined pool. When you convert any portion, taxable and nontaxable dollars come out proportionally.

Say you have $92,500 of pre-tax money in a Traditional IRA from old 401(k) rollovers, and you add $7,500 in nondeductible contributions for the backdoor conversion. Your total IRA balance is $100,000, and 92.5% of it is pre-tax. Convert $7,500, and 92.5% of that conversion, or $6,937, is taxable. The strategy barely works when there’s a large pre-tax balance sitting alongside the nondeductible contribution.

The workaround is to move pre-tax IRA money into an employer 401(k) before converting, sometimes called a reverse rollover. Not every plan accepts incoming IRA rollovers, so check the plan’s terms first. Once the pre-tax money is out of your IRAs, the pro-rata calculation only sees after-tax dollars and the conversion becomes tax-free.

Track your after-tax basis on Form 8606 every year you make a nondeductible contribution. The form is what proves to the IRS that some of the money was already taxed. Skip it and the IRS will treat the entire conversion as taxable. The statutory penalty for not filing Form 8606 is $50, but the practical cost of losing your basis documentation is much higher.¹²

1
Internal Revenue Service. 401(k) Limit Increases to $24,500 for 2026, IRA Limit Increases to $7,500
2
Internal Revenue Service. Modified Adjusted Gross Income
3
Office of the Law Revision Counsel. 26 USC 408A – Roth IRAs
4
Office of the Law Revision Counsel. 26 USC 4973 – Tax on Excess Contributions to Certain Tax-Favored Accounts and Annuities
5
Internal Revenue Service. Instructions for Form 5329 (2025)
6
Internal Revenue Service. Quarterly Interest Rates
7
Internal Revenue Service. Publication 590-A (2025) – Contributions to Individual Retirement Arrangements
8
Internal Revenue Service. Retirement Topics – Exceptions to Tax on Early Distributions
9
Internal Revenue Service. Instructions for Form 8606
10
Internal Revenue Service. About Form 8606, Nondeductible IRAs
11
Internal Revenue Service. Chapter 11 – Statute of Limitations
12
Office of the Law Revision Counsel. 26 U.S. Code 6693 – Failure to Provide Reports on Certain Tax-Favored Accounts or Annuities