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[[What if one contributes more than the allowed amount ? i.e. more than $2000 or People with AGI
that allows less than $2000.]]

If you have an excess contribution, you'll pay a 6% penalty tax on that distribution each and every year that the distribution is considered "excessive".

It's hart to overcome this 6% penalty and still make a reasonable return in your IRA. It will be due and payable on an annual basis.

[[ I am thinking about contributing $2000 for 1998 and for 1999 around Jan 2, 1999 to start my FF
in Roth IRA, but there is a chance that in 1999 I may go over the AGI limit. If the penalties are not
too severe, I was thinking about just taking the chance ?]]

But even if you DO make your contribution for 1999 early next year, if you find that your 1999 AGI is over the limitation, you can always remove the contribution (and earnings on that contribution) prior to April 15, 2000 and still be square with Uncle Sammy. Or you can recharacterize your $2k contribution out of the Roth IRA and back to a regular IRA.

So the decision point date isn't when you make the contribution, but when you know for sure that you are not allowed to make the contribution. See the difference??

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