Removing Excess Contributions

An excess contribution occurs when you contribute more to a retirement account than the IRS allows for a given year. For instance, if your IRA or 401(k) contributions exceed the annual limit, the extra amount is deemed an excess contribution.

If not addressed, excess contributions can result in tax penalties. Generally, the excess must be withdrawn or corrected by the tax filing deadline (including extensions) for the year in which the excess was made to avoid penalties. Failure to correct the excess may incur a 6% excise tax each year the excess amount remains in the account. To learn more, please review IRS publication 590-A or visit irs.gov.

How do I submit an excess contribution removal?

For requests involving excess removals, please visit taking a distribution to locate the required forms and steps to submit.

What is Net Income Attributable?

Net Income Attributable (NIA) refers to the earnings generated by excess contributions in a retirement account. When you withdraw excess contributions, you are typically required to also withdraw any income that those excess contributions earned while they were in the account.

NIA is calculated based on the proportion of the excess contribution to the total account balance and the income earned during the period the excess amount was in the account. This ensures that the withdrawal of excess contributions does not include any earnings that were generated by those contributions, maintaining fairness in the correction process.

Please note that Net Income Attributable (NIA) is not calculated by Webull. You are responsible for providing us with the amount of income attributable. It is recommended to consult with a licensed tax professional to ensure the correct amount is withdrawn. For more information on NIA, please refer to IRS Publication 590-A.

Webull Financial does not offer tax advice. Any integration with third-party tax software is provided for informational purposes only. For any questions about taxes, including how to file, you should contact a tax professional.