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Your personal tax adviser either needs to be more clear with you or go back to tax school. You cannot make a *deductible* contribution to a traditional IRA - that phases entirely out by $103K for 2007. There is, however, no income limit for a non-deductible contribution to a traditional IRA. That's what you would be making, and you can absolutely do it. Anyone can.

In addition to a recharacterization, other choices are to:
- pay a 6% fee on the overcontribution each and every year from here-on out. This will stop when you 'catchup'. I.e. if you were able to make a 2008 contribution but you don't, then your $4K overcontribution will cancel out with the $4K you didn't make, and the penalty will stop. Meaning, if you expect to be eligible next year, you'll only have to pay the 6% (6% of $4000 times 2 people = $480) once.

- withdraw the money and pretend you had never contributed it. You can do this until the due date of your 2007 return (i.e. April 15th, 2008). The one extra trick here is you will have to withdraw any associated 'earnings' (your custodian should calculate this). If they are a positive number, then you will have to include them as income on your *2007* return.

For more information see Publication 590, i.e. everything you ever wanted to know about IRAs.

What if you contribute too much?


And see in Table 1-2 here that the limits are how much you can *deduct*, not how much you can contribute, to a Trad IRA:
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