Re: You likely will not be penalized if you will h...
Moderator

Seniors and students

If I understand correctly, both of you are retired, which means you can't increase your contribution limit for future years to cover this overcontribution amount. A big portion of the contribution limit every year comes from 18% of the employment income of the prior year. So if your husband is not working, then the chance of him covering this amount is very slim.

 

You can't use the $2000 over-contribution limit twice in your lifetime, and if you use it once, you have to be able to cover it the next year by increasing your contribution limit from employment income. If you can't, then you should withdraw this amount because the penalty for keeping it is higher than withdrawing it.

 

Unused contribution can be used for any succeeding year even for retirees because the contribution itself has been claimed in the past. Keep in mind, if you don't have a taxable income then claiming this amount won't change the tax liability. 

 

I hope this was helpful

 

 

 

 

 

 

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