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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