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This appears to be a great loophole. Six percent is even less than leveraging a portfolio on margin at 7.75%, and it's not even close to the 20% long term capital gains. Does TMF have any pros/cons regarding additional IRA contributions? Asterisk>>

<bi>"You apparently missed the fact that the 6% penalty is applied yearly. Even in a Roth where ultimately you can take earnings tax-free, that reduces your return on that money to about an untaxed municipal bond rate. Run the numbers yourself, and you should quickly discover that investing the excess money in a taxable stock account using a LTB&H strategy will give you a far better result than investing in the same thing within a Roth while incurring an annual 6% penalty.Pixy"</bi>

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. thanks, Meowiz
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