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Author: RWandfool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75838  
Subject: AGI over limit after Roth Contribution! Date: 12/22/1999 10:40 AM
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I would like to make my 1999 contributions to family ROTH's in January to start tax free earnings, but wanted to know what would happen if by the end of the year my AGI ended up being more than the limit of $150K? Can the funds be removed with interest paid on earnings and avoid a penalty? Or would I end up having to pay the 10% penalty on the earnings? I would never complain about a bonus, but it could cause problems. Please help a greedy fool make an educated decision.
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Author: TMFPixy Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 16771 of 75838
Subject: Re: AGI over limit after Roth Contribution! Date: 12/22/1999 11:03 AM
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Greetings, RWandfool, and welcome. You wrote:

<<I would like to make my 1999 contributions to family ROTH's in January to start tax free earnings, but wanted to know what would happen if by the end of the year my AGI ended up being more than the limit of $150K? Can the funds be removed with interest paid on earnings and avoid a penalty? Or would I end up having to pay the 10% penalty on the earnings? I would never complain about a bonus, but it could cause problems. Please help a greedy fool make an educated decision.>>

You could either recharacterize that excess contribution as one made to a nondeductible traditional IRA or remove it and all earnings before April 17, 2000. For details, see IRS Publication 590 (Individual Retirement Arrangements) available at http://www.irs.ustreas.gov/prod/forms_pubs/index.html.

Regards..Pixy

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Author: Bobbcat Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 16791 of 75838
Subject: Re: AGI over limit after Roth Contribution! Date: 12/22/1999 7:29 PM
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If you are waiting until January to make the contribution, won't you know by then if you received a December bonus?

Any bonus received in January would be on your 2000 W-2.

*Cat

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