Common use of Excess Contribution Clause in Contracts

Excess Contribution. In the event you make an excess contri- bution during a taxable year (i.e., a contribution which exceeds the allowable contribution limitations or a contribution which does not satisfy the requirements for rollover/conversion con- tributions), the Trustee will refund the excess upon request. As with a Traditional IRA, to avoid a penalty tax, you must receive the refund by the date (including extensions) pre- scribed by law for filing your income tax return for the taxable year of the excess contribution and you must receive with the refund the net earnings attributable to the excess contribution. The amount of the excess contribution withdrawn will not be considered to be a premature distribution and will not be taxed as ordinary income. However, you must report the net earn- ings withdrawn as ordinary income in the taxable year for which you made the excess contribution and such earnings may be subject to the 10% penalty tax for early withdrawals. If the return of excess contributions from the ▇▇▇▇ ▇▇▇ is made after the due date (including extensions) for filing your income tax return for the taxable year of the excess contribution, like the Traditional IRA a penalty tax will apply.