My wife and I have been retired for about 18 months, and I forgot to stop my auto contributions to our IRAs for 2009. What do I need to do to correct this as far as the IRS is concerned when I file my taxes? – John


I love savers. One of the many challenges some folks face with retirement is transitioning from being savers to using what you’ve saved. Of course, I’m all about saving, whether it means putting money away for retirement or watching what you spend once you are retired – a dollar saved is a dollar earned. That being said, the IRS generally doesn’t allow you to fund an IRA if you don’t have “earned income.” Pensions and investment income don’t count. So it sounds like you’re right and are going to have to undo your contributions. Luckily, it’s still early in the year and you probably haven’t filed your tax return yet, so the process should be fairly easy. However, you need to contact your IRA custodian immediately, explain your situation and request the appropriate form to withdraw your 2009 contribution. They should calculate the earnings attributed to your contributions and remove both from your IRA – no harm, no foul, just maybe a little tax owed on the growth (if any). Contributions that remain beyond your tax deadline will be hit with a 6-percent penalty. Now stop reading and pick up the phone, or log on to your financial institution’s website and look for the “correction of excess contribution” form.