My wife and I contributed $2000 each to our Roth IRAs on January 1. Now it appears that our income for the year will disqualify us from making any contribution at all.Is there a procedure we need to go through to remove this money from our IRAs? I assume we'll have to figure out what earnings (if any) we had on that money, withdraw that as well, and pay tax on it?Thanks,Sam
You are entitled to contribute $2000 to a traditional IRA assuming you each have at least $2000 in earned income. There isn't any upper limit. If your income turns out to be much more than you expected for the year, so that you are not entitled to contribute to a Roth, the $2000 can be recharacterized to a traditional IRA, which can be with the same custodian where you have your Roth. Talk to your custodian about how to do this. Congratulations on your income! Chris
TO: JoeSchmoeAnother Fool had a similar problem and they were able to solve it simply by withdrawing this year's contributions from their Roth IRA. There is some paperwork which your financial institution should be able to guide you with. There was no mention of how any gain (presuming your investment appreciated this year) would be handled.As you are probably aware, there is an extra penalty if you contribute excess amount to Roth IRA. Suggest you contact your financial institution ASAP.
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