I hit the maximum contribution limit on account A, and cash contributions through the financial institution holding account B are a headache.

If I sell some of my stocks in account A and transfer the cash to account B, will my contributions to date on account A go down by the amount of the transfer?

  • 2
    The contribution limit for IRAs is a total limit on all your IRAs, Roth and non-Roth, not a per-account limit. From your question it sounds like you may be thinking the limit is per account.
    – BrenBarn
    Oct 28 '14 at 19:30
  • @BrenBarn - you might fluff this up a bit and write it an answer. Oct 28 '14 at 19:54
  • @BrenBarn Ah. I missed that part. You should put that as an answer. Oct 28 '14 at 20:11
  • So Account A and Account B are both Roth IRA accounts? Why don't you just rollover the money from account A to account B?
    – user102008
    Oct 31 '14 at 1:39

The IRA contribution limit is a limit on the total amount you can contribute to all of your Roth and traditional IRAs. It's not a per-account limit. (See here and here.) Once you've hit the contribution limit on one account, you've hit it on all of them.

Even so, supposing you had a reason with try to take money out of one of the accounts, the answer to your question is "sort of". The limit is a limit on your gross contributions, not your net contributions. It is possible to withdraw Roth contributions if you do so before the tax filing deadline for that year, but you must also withdraw (and pay taxes on) any earnings accured during the time the money was in the Roth (see here). In addition, doing this may not be as simple as just taking the money out of your account; you should probably ask your bank about it and let them know you're "undoing" the contribution, since they may otherwise still record the amount as a real contribution and the withdrawal as unqualified early withdrawal (subject to penalties, etc.).

  • +1 I will add that not removing the excess contributions (and the earnings thereon) brings about a tax assessment of 6% of the excess year after year until the excess is withdrawn. The withdrawn earnings on the excess are taxable income for the year of withdrawal, not the year when the excess deposit occurred. Oct 28 '14 at 22:55

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