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Meowiz writes (in part):

Here is the answer to the 6% tax penalty problem. I'm not sure what to do if you don't know for sure in advance that this overcontribution could happen, due to a good investment year or increased employment income....just wait till end of the tax year to contribute to Roth? Or can you remove the earnings with the 2K when you find out you overcontributed? I will ask Vanguard this too and let you know if no one knows.

I reply:

Just go ahead and make your contributions as you normally would. If you find yourself in the phase-out range, you may simply recharacterize any portion of the Roth contributions into a traditional IRA. This recharacterization may occur at any time until the due date for your tax return (I believe that's with extensions). Vanguard will insist on doing the earnings calculation to determine how much of the earnings will follow the recharacterized contributions into the traditional IRA. There will be no effect on your income and no excise tax to worry about. --Bob
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