A. Typically you need to withdraw some or all of the money from the plan, or reallocate it to next year’s contribution. Taxpayers have until the due date for filing the tax return, not including extensions, (generally April 15) to withdraw the excess contributions plus any income generated by the excess contributions. Failure to properly withdraw the excess contributions results in a penalty of 6 % per year, or fraction thereof, based on the amount of the excess contributions. In some circumstances, the withdrawal may be accomplished by reallocating the excess contribution to the following tax year. Consult your financial advisor for more details on the proper procedures.

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