I have always contributed to my Roth IRA after the tax year has ended (e.g. 2021 contribution to Roth in February 2022). At that time, I am certain I am not over the MAGI (Modified Adjusted Gross Income), and am eligible to make a Roth contribution.
For this current year, I am thinking about making my 2022 Roth IRA contribution earlier (e.g. in the next few months), and putting that money into stocks. I am pretty certain I will not be over the MAGI for 2022, barring any unforeseen circumstance.
But if for some reason, I suddenly become over the MAGI, what are the steps to take and tax implications I should be aware of? I am assuming I would need to withdraw/take distribution of my 2022 contribution amount, and possibly pay taxes on any gains. How does the IRS determine if gains were made from pre-2022 contributions or not? What if there are losses?
Thank you.
