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<<In January, I opened Roth IRAs for both my husband and myself and deposited $2k each. Then the company we both work for was acquired, and he was downsized. Between my unexpected project bonuses and his generous severance package, we might exceed the $150k AGI limitation, although it would be close. (I never thought that making TOO much money would be a problem!)

One thing I've thought of doing is maximizing our contributions to the 401k. We currently contribute 4% each, to get the company match. We don't contribute more because of the generally poor-performing investment choices in the plan.

If we did exceed the AGI limitation, what would I have to do, by when, in order to avoid tax consequences and penalties? Or is it already too late?>>

You have until your filing date of April 15, 1999, to make an IRA election. Therefore, if you determine on 12/31/98 that you have exceeded the $160K limits for a Roth contribution, you may have the account redesignated as a tradition, nondeductible IRA or just withdraw all the money to include earnings. If you do the latter, you must declare the earnings as income and apply those earnings to the applicable tax year (i.e., 1998 and 1999). The IRA custodian can help you do that.


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