IRA Contribution Error: Fix Before Tax Deadline
Update: 2025-12-21
Description
Retirees IRA Contribution Error: A Fixable MistakeA retirees regret over contributing to a traditional IRA instead of a Roth, fearing double taxation, is addressed. The real issue is an excess contribution due to lack of earned income. The solution: withdraw the contribution and earnings by the tax filing deadline to avoid penalties. Liz Weston emphasizes the importance of hiring a tax professional for such retirement moves. She also discusses estate planning, highlighting the benefits of adding beneficiaries to accounts beyond IRAs to bypass probate. However, she warns of potential pitfalls with beneficiary designations, such as cash shortfalls, uneven splits, and unaddressed life changes. The takeaway: these tools are valuable when used wisely, so consult with professionals to tailor your approach.
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