Overcontribution

DEFINITION of 'Overcontribution'

Any contribution to a tax-deductible retirement savings plan exceeding the maximum allowed contribution for a given period as determined by the retirement plan's registrar. Overcontributions are subject to the retirement plan's regulations or laws. Overcontributions are usually subject to some form of monetary penalty, intentioned to reduce their occurrences.

BREAKING DOWN 'Overcontribution'

In the United States, overcontributions to Roth IRAs are subject to penalty if they are beyond a prescribed annual maximum overcontribution. The Government of Canada's RRSP program is known for the penalties imposed on RRSP overcontributions. 

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RELATED FAQS
  1. I over contributed to my 401k for 2015-2016. Will I be penalized by IRS in 2017?

  2. Are catch-up contributions tax deductible?

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  3. I overcontributed to my Roth, then lost half of this money to the market. Does the ...

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