As kaiotes123 posted the limit to be able to contribute the full amount to the Roth IRA is under $196,000.
Excess contributions are taxed at 6% per year for each year the excess amounts remain in the IRA. To avoid the 6% tax on excess contributions, you must withdraw:
- the excess contributions from your IRA by the due date of your individual income tax return (including extensions); and
- any income earned on the excess contribution.
You will have to tell your bank that you want to withdraw your your excess contribution and earnings. You might have to withdraw a little more than $550 for each since the earnings will have to be reported on your 2020 tax return which will increase you MAGI more.
Or you can recharacterize/switch the $550 to a traditional IRA contribution and select to make them nondeductible on your 2020 tax return. You need to tell your bank that you want to recharacterize your your $550 Roth contribution to a traditional IRA contribution. Then you can convert the amount later to a Roth IRA . This is called backdoor Roth.
If you like more information on these options then please comment here.
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