Message Font: Serif | Sans-Serif
 
No. of Recommendations: 3
What happens if I contribute to a Roth IRA in one year, projecting that my AGI will be under the limit, but it ends up actually being over the limit?

You have two choices:

1. "Recharacterize" the contribution and its earnings as a traditional IRA contribution and earnings. Your deadline is October 15 of the year following the tax year in question.

2. Withdraw the contribution and the earnings on it. You'll owe the 10% premature distribution penalty on only the earnings, if you're under 59 1/2. Your deadline is the due date of that year's return, not including extensions.

You can read more about these options in IRS Publication 590.

Phil
Print the post  

Announcements

Disclaimer:
In accordance with IRS Circular 230, you cannot use the contents of any post on The Motley Fool's message boards to avoid tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions.
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.