A. First, let's see under what circumstances such overcontribution might occur.
If you are contributing to your workplace 401(k) plan, it's hard for such overcontribution to occur because most employers have systems in place prevent it from happening.
However, if you changed job during the year and your new employer doesn't know how much you have contributed to your previous employer's 401(k) account, such overcontribution could happen.
For IRA contributions, it's your responsibility to manage them, which means your risk of overcontribution is greater. This could be especially true if you automate your IRA contributions and miscalculate how much you are contributing to it.
In our next blog post, we will discuss what to do if you found you have overcontributed to your retirement account.