What happens if I contribute too much to my IRA by mistake?

An excess IRA contribution – exceeding the $7,000/$8,000 limit or contributing without enough earned income or above the Roth income cap – triggers a 6% penalty on the excess for every year it stays in the account. The fix is to act before your tax-filing deadline (including extensions): withdraw the excess plus any earnings it generated, or recharacterize it to the other IRA type if that solves the eligibility problem. Another option is to apply the excess as a contribution for the following year if you have room. Catching it early matters because the 6% penalty repeats annually until corrected. The earnings you withdraw alongside the excess are taxable in the year contributed. If you realize the mistake right after contributing, call your custodian and request a 'return of excess contribution' to clean it up smoothly.