Avoid these common and potentially very costly IRA errors.
1. Not contributing enough
To receive the maximum benefit from your retirement account — the biggest possible nest egg, grown through investments — you want to put the maximum amount into your account each year.
The 2019 limit on IRA contributions is $6,000, or $7,000 if you're 50 or older.
With a traditional IRA, you contribute pre-tax dollars from your pay, and you may be able to deduct the amounts from your taxes, too. Your withdrawals in retirement are taxed as ordinary income.
With a Roth IRA, contributions get no tax breaks, but withdrawals are tax-free.
2. Contributing too much
Funding your IRA is like the bidding on The Price Is Right: You want to hit your contribution limit without going over.
If you exceed the threshold in any year, it can be almost as bad as going home from a game show empty-handed, without the new dinette set.
The IRS will charge you a 6% penalty tax on the excess amount for each year that it remains in your IRA, until you've either removed it or have reduced a future contribution to compensate.