There are two primary types of IRAs: Traditional and Roth. Traditional IRAs offer tax-deductible contributions and tax-deferred growth, but withdrawals are taxed. Roth IRAs are funded with after-tax dollars, offering tax-free growth and withdrawals if certain conditions are met.

Maximizing tax efficiency involves contributing the maximum allowed to both 401(k)s and IRAs, especially during peak earning years. If possible, prioritize employer-matched 401(k) contributions, and consider converting to a Roth IRA if future tax brackets are expected to be higher.

To minimize taxes on IRA withdrawals, consider balancing between traditional and Roth IRAs. Distribute from traditional IRAs when in a lower tax bracket. Roth IRAs offer tax-free withdrawals after age 59½ if the five-year rule is met, providing a strategic way to minimize tax liability.

Yes, excess contributions can be corrected by removing the excess amount and any earnings it may have generated. This can prevent additional taxes on excess contributions. It is best to work with a tax advisor to ensure proper reporting on your tax return.