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Greetings, Practical1, and welcome. You asked:

Hi, I am very confused as to why my tax preparation software is telling me that I am subject to a 6% penalty for a Roth IRA contribution of $2000. My AGI in 2001 is definitely less than the AGI limit...I have looked on www.fool.com and elsewhere trying to figure this out, and I don't see how $2000 can be too much...I am eligible to open a Roth IRA, and $2000 < (total earned income - 401k contributions) as described below.

As long as your modified adjusted gross income is less than $150K when filing jointly or $95K when filing separately and at least $2K AND you have made no contribution to any other Roth or traditional IRA in 2001, then you may contribute the full $2K to the Roth IRA.

I suspect that your tax preparation software either thinks your AGI is too high or that you made another contribution to a different Roth or traditional IRA during the year. Double check your entries to ensure you haven't made an error during your inputs. If not, then call the software company's technical support to see what's going on.

Regards..Pixy
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