{"id":281604,"date":"2021-06-23T12:03:00","date_gmt":"2021-06-23T09:03:00","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/nerdwallet-the-irs-is-watching-are-you-saving-too-much-for-retirement\/"},"modified":"2021-06-23T12:03:00","modified_gmt":"2021-06-23T09:03:00","slug":"nerdwallet-the-irs-is-watching-are-you-saving-too-much-for-retirement","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/nerdwallet-the-irs-is-watching-are-you-saving-too-much-for-retirement\/","title":{"rendered":"#NerdWallet: The IRS is watching: Are you saving too much for retirement?"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_85 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a35883cdd87d\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #dd3333;color:#dd3333\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #dd3333;color:#dd3333\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a35883cdd87d\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/buradabiliyorum.com\/en\/nerdwallet-the-irs-is-watching-are-you-saving-too-much-for-retirement\/#There_are_penalties_for_overstuffing_retirement_accounts_and_underspending_the_money\" >There are penalties for overstuffing retirement accounts and underspending the money<\/a><ul class='ez-toc-list-level-6' ><li class='ez-toc-heading-level-6'><ul class='ez-toc-list-level-6' ><li class='ez-toc-heading-level-6'><ul class='ez-toc-list-level-6' ><li class='ez-toc-heading-level-6'><ul class='ez-toc-list-level-6' ><li class='ez-toc-heading-level-6'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/buradabiliyorum.com\/en\/nerdwallet-the-irs-is-watching-are-you-saving-too-much-for-retirement\/#Overstuffing_your_retirement_accounts\" >Overstuffing your retirement accounts<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-6'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/buradabiliyorum.com\/en\/nerdwallet-the-irs-is-watching-are-you-saving-too-much-for-retirement\/#How_to_limit_the_damage\" >How to limit the damage<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-6'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/buradabiliyorum.com\/en\/nerdwallet-the-irs-is-watching-are-you-saving-too-much-for-retirement\/#The_heavy_penalty_for_not_withdrawing_enough\" >The heavy penalty for not withdrawing enough<\/a><\/li><\/ul><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/buradabiliyorum.com\/en\/nerdwallet-the-irs-is-watching-are-you-saving-too-much-for-retirement\/#Liz_Weston\" >Liz Weston<\/a><\/li><\/ul><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<p>&#8220;<strong>#NerdWallet: The IRS is watching: Are you saving too much for retirement?<\/strong>&#8221;<\/p>\n<h2 class=\"article__subhead\" itemprop=\"alternativeHeadline\"><span class=\"ez-toc-section\" id=\"There_are_penalties_for_overstuffing_retirement_accounts_and_underspending_the_money\"><\/span>\n  There are penalties for overstuffing retirement accounts and underspending the money<br \/>\n<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p><\/p>\n<div class=\"column column--full article__content\">\n<div class=\"article__side\">\n<div class=\"container--sticky not-active\">\n<div id=\"cx-next\">\n              <\/div>\n<\/p><\/div>\n<\/p><\/div>\n<div id=\"js-article__body\" class=\"article__body article-wrap at16-col16 barrons-article-wrap\" itemprop=\"articleBody\" data-sbid=\"WP-MKTW-0000310376\">\n<div class=\"barrons-article-ad-wrapper\">\n<div data-track=\"barrons-article-ad-wrap\" class=\"barrons-article-ad sticky_item\">\n<div class=\"barrons-main-article-ad-target sticky_target body_ad\" aria-hidden=\"true\"><\/div>\n<\/p><\/div>\n<\/p><\/div>\n<div data-layout=\"\n                inline\" data-layout-mobile=\"\" class=\"\n          media-object\n          type-InsetArticleReader\n              \n              inline\n  article__inset\n          article__inset--type-InsetArticleReader\n              article__inset--inline\n  \"><\/p>\n<div class=\"media-object-article-reader\">\n<div class=\"audioplayer\" data-sbid=\"WP-MKTW-0000310376\" role=\"region\" aria-label=\"Listen to Article\" tabindex=\"-1\" id=\"articlereader\" data-show-title=\"false\" data-theme=\"wsj-article-reader\" data-show-header=\"false\" data-show-subscribe=\"false\" data-ads-enabled=\"true\" data-save-publication=\"false\">\n        <\/div>\n<\/p><\/div>\n<\/p><\/div>\n<p>       <em>This <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.nerdwallet.com\/article\/finance\/what-to-do-if-you-save-too-much-for-retirement?utm_campaign=ct_prod&amp;utm_source=syndication&amp;utm_medium=wire&amp;utm_term=anne-stanleymarketwatch-com&amp;utm_content=1009754\" class=\"icon none\">article<\/a> is reprinted by permission from <\/em><a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.nerdwallet.com\/blog\/?utm_campaign=ct_prod&amp;utm_source=syndication&amp;utm_medium=wire&amp;utm_term=anne-stanleymarketwatch-com\" class=\"icon none\"><em>NerdWallet<\/em><\/a><em>.\u00a0<\/em><\/p>\n<p> Many Americans don\u2019t save enough for retirement, but it\u2019s entirely possible to save too much \u2014 at least according to the IRS.<\/p>\n<p>Tax laws limit how much you\u2019re allowed to contribute to retirement accounts, and excess contributions can be penalized. Uncle Sam doesn\u2019t want you to leave the money in the account too long, either. Those who fail to take enough out of their retirement accounts also face heavy penalties.<\/p>\n<div class=\"paywall\">\n       Here\u2019s what you need to know to stay on the right side of the IRS\u2019 rules.<\/p>\n<h6><span class=\"ez-toc-section\" id=\"Overstuffing_your_retirement_accounts\"><\/span>Overstuffing your retirement accounts<span class=\"ez-toc-section-end\"><\/span><\/h6>\n<p>Not everyone is allowed to contribute to retirement accounts. Contributions to an IRA or Roth IRA require you or your spouse to have \u201cearned income\u201d such as wages, salary, bonuses, commissions, tips or self-employment income. Pension payments, <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/social-mediaa\/\" data-internallinksmanager029f6b8e52c=\"1\" title=\"Social Media\" target=\"_blank\" rel=\"noopener\">Social<\/a> Security benefits, rental income and interest and dividends don\u2019t count. Also, the ability to contribute to a Roth phases out at modified adjusted gross incomes between $125,000 and $140,000 for single filers, from $198,000 to $208,000 for married couples filing jointly.<\/p>\n<p>People may not realize that the\u00a0<a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.nerdwallet.com\/article\/investing\/ira-contribution-limits?utm_campaign=ct_prod&amp;utm_content=1009754&amp;utm_medium=wire&amp;utm_source=syndication&amp;utm_term=anne-stanleymarketwatch-com\" class=\"icon none\">annual limit on IRA contributions<\/a>\u00a0\u2014 $6,000 for 2021, plus a catch-up contribution of $1,000 for people 50 and over \u2014 is the cap for all IRA accounts. In other words, you can\u2019t contribute $6,000 to a traditional IRA and another $6,000 to a Roth IRA in the same year.<\/p>\n<p>You also can contribute too much to a workplace plan such as a 401(k), especially if you change jobs during the year. Your new employer won\u2019t know if you\u2019ve already made contributions to your previous employer\u2019s plan that would count toward the\u00a0<a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.nerdwallet.com\/article\/investing\/401k-contribution-limits?utm_campaign=ct_prod&amp;utm_content=1009754&amp;utm_medium=wire&amp;utm_source=syndication&amp;utm_term=anne-stanleymarketwatch-com\" class=\"icon none\">annual limits<\/a>\u00a0(typically $19,500 for 2021, plus a $6,500 catch up contribution for people 50 and older), says tax expert Mark Luscombe, principal analyst at Wolters Kluwer Tax &amp; Accounting.<\/p>\n<p><strong>Also see:<\/strong> Should I roll over my 401(k) when I move to a new job \u2014 and if so, how? What to know about rolling over your retirement accounts<\/p>\n<p>Even if you don\u2019t change jobs, your 401(k) contributions could be c<a href=\"https:\/\/buradabiliyorum.com\/en\/category\/download-scripts-themes-apps\/\" data-internallinksmanager029f6b8e52c=\"9\" title=\"Download Scripts &amp; Themes &amp; Apps\" target=\"_blank\" rel=\"noopener\">app<\/a>ed if you\u2019re deemed a \u201chighly compensated employee.\u201d That can happen if not enough lower-paid workers contribute and you own more than 5% of the company, earn more than a certain amount (currently $130,000) or are among the top 20% of employees ranked by compensation. Your excess contributions will be sent back to you as a check or other payment.<\/p>\n<h6><span class=\"ez-toc-section\" id=\"How_to_limit_the_damage\"><\/span>How to limit the damage<span class=\"ez-toc-section-end\"><\/span><\/h6>\n<p>But usually it\u2019s up to you to discover and fix an excess contribution. If you catch the problem soon enough \u2014 before you file your tax return for that year \u2014 you can limit the damage by withdrawing the excess contribution, says financial planner Robert Westley, a member of the American Institute of CPAs\u2019 Financial Literacy Commission. You would also need to withdraw any earnings attributable to that contribution.<\/p>\n<div id=\"cx-membership-tile\"><\/div>\n<p>The withdrawal will be taxed as income. If the money came from an IRA, you may owe a 10% early withdrawal penalty on earnings if you\u2019re under 59\u00bd, Westley says.<\/p>\n<p><strong>Learn more: <\/strong>The penalty for early withdrawals<\/p>\n<p>If you miss the tax deadline, a 6% penalty could apply for each year the excess contribution remains in the IRA. An excess 401(k) contribution can trigger double taxation: The excess contribution and earnings are taxed when they\u2019re withdrawn, but the contribution is also added back to your taxable income for the year you made the contribution, Westley says. Contact a tax professional to discuss your options.<\/p>\n<h6><span class=\"ez-toc-section\" id=\"The_heavy_penalty_for_not_withdrawing_enough\"><\/span>The heavy penalty for not withdrawing enough<span class=\"ez-toc-section-end\"><\/span><\/h6>\n<p>You\u2019re not required to take distributions from a Roth IRA during your lifetime. Other retirement accounts, however, usually require you to start\u00a0<a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.nerdwallet.com\/article\/investing\/required-minimum-distributions?utm_campaign=ct_prod&amp;utm_content=1009754&amp;utm_medium=wire&amp;utm_source=syndication&amp;utm_term=anne-stanleymarketwatch-com\" class=\"icon none\">withdrawing minimum amounts<\/a>\u00a0after you turn 72. The age used to be 70\u00bd, but the Setting Every Community Up for Retirement Enhancement Act changed it for people born after June 30, 1949. You must take your first distribution by April 1 of the year following the year you turn 72. After that, distributions must be made annually by Dec. 31.<\/p>\n<p>Miss a deadline or take too little, and the IRS penalty is 50% of the amount you should have withdrawn but didn\u2019t.<\/p>\n<p><strong>See<\/strong>: How much can I spend in retirement?<\/p>\n<p>If you\u2019re still working at age 72 and your plan allows it, you can put off required minimum distributions from your current employer\u2019s 401(k), 403(b) or other defined-contribution plan until you retire (unless you own 5% or more of the business). Even if you\u2019re working, however, you must start minimum withdrawals from previous employers\u2019 plans as well as from IRAs and self-employed retirement plans, including SEPs and SIMPLEs.<\/p>\n<p>After your death, the SECURE Act <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/general\/\" data-internallinksmanager029f6b8e52c=\"3\" title=\"General\" target=\"_blank\" rel=\"noopener\">general<\/a>ly requires your heirs to empty retirement accounts, including Roth IRAs, within 10 years, although there are exceptions for surviving spouses, people who have disabilities or chronic illnesses, minor children or heirs who aren\u2019t more than 10 years younger than the IRA account owner. (This is a new rule that applies to people who die after 2019.)<\/p>\n<p><strong>Watch:<\/strong> 3 tax breaks most people miss<\/p>\n<p>Once again, the rules are complex enough that it\u2019s worth consulting a tax pro to make sure you don\u2019t end up paying the IRS a lot more than necessary.<\/p>\n<p><strong>More From NerdWallet<\/strong><\/p>\n<ul class=\"articleList\">\n<li>\n      <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.nerdwallet.com\/article\/finance\/when-its-ok-to-let-your-good-credit-score-drop?utm_campaign=ct_prod&amp;utm_source=syndication&amp;utm_medium=wire&amp;utm_term=anne-stanleymarketwatch-com&amp;utm_content=1009754\" class=\"icon none\">When It\u2019s OK to Let Your Good Credit Score Drop<\/a><\/p>\n<\/li>\n<li>\n      <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.nerdwallet.com\/article\/finance\/memorial-day-shopping-tips?utm_campaign=ct_prod&amp;utm_source=syndication&amp;utm_medium=wire&amp;utm_term=anne-stanleymarketwatch-com&amp;utm_content=1009754\" class=\"icon none\">Set Your Strategy for Memorial Day Sales<\/a><\/p>\n<\/li>\n<li>\n      <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.nerdwallet.com\/article\/finance\/how-to-be-a-better-long-distance-caregiver?utm_campaign=ct_prod&amp;utm_source=syndication&amp;utm_medium=wire&amp;utm_term=anne-stanleymarketwatch-com&amp;utm_content=1009754\" class=\"icon none\">How to Be a Better Long-Distance Caregiver<\/a><\/p>\n<\/li>\n<\/ul>\n<p><em>Liz Weston writes for NerdWallet. Email: lweston@nerdwallet.com. Twitter: @lizweston.<\/em><\/p><\/div>\n<\/div><\/div>\n<p><\/p>\n<div class=\"byline article__byline\">\n<p>      <span>By<\/span><\/p>\n<div class=\"author  hasMenu\" data-scrim='{\"type\":\"author\",\"header\":\"Liz Weston \",\"subhead\":\"The Wall Street Journal\",\"list\":[]}' itemscope itemprop=\"author\" itemtype=\"http:\/\/schema.org\/Person\">\n<h4 itemprop=\"name\"><span class=\"ez-toc-section\" id=\"Liz_Weston\"><\/span>Liz Weston <span class=\"ez-toc-section-end\"><\/span><\/h4>\n<\/p><\/div>\n<\/div>\n<blockquote><p><strong><span style=\"color: #ff6600;\">If you liked the article, do not forget to share it with your friends. Follow us on\u00a0<span style=\"color: #ff0000;\"><a style=\"color: #ff0000;\" href=\"https:\/\/news.google.com\/publications\/CAAqBwgKMLG0nwswvr63Aw\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Google News<\/a><\/span>\u00a0too, click on the star and choose us from your favorites.<\/span><\/strong><\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\">For forums sites go to <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/forum.buradabiliyorum.com\/\" target=\"_blank\" rel=\"noopener\">Forum.BuradaBiliyorum.Com<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\"><strong>If you want to read more <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/news\/\" data-internallinksmanager029f6b8e52c=\"2\" title=\"News\" target=\"_blank\" rel=\"noopener\">News<\/a> articles, you can visit our <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/en.buradabiliyorum.com\/news\/\" target=\"_blank\" rel=\"noopener\">News category.<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<p><span style=\"color: black;\"><a style=\"color: #ff9900;\" href=\"http:\/\/www.marketwatch.com\/news\/story.asp?guid=%7B20C05575-04D4-B545-74BC-681944163510%7D&#038;siteid=rss&#038;rss=1\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>&#8220;#NerdWallet: The IRS is watching: Are you saving too much for retirement?&#8221; There are penalties for overstuffing retirement accounts and underspending the money This article is reprinted by permission from NerdWallet.\u00a0 Many Americans don\u2019t save enough for retirement, but it\u2019s entirely possible to save too much \u2014 at least according to the IRS. Tax laws&#8230;<\/p>\n","protected":false},"author":1,"featured_media":281605,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"","fifu_image_alt":"","footnotes":""},"categories":[70897],"tags":[],"class_list":["post-281604","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/281604","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=281604"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/281604\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/281605"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=281604"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=281604"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=281604"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}