Retirement tax questions

Please be aware that you need earned income to make IRA contributions.

For 2022 the total contributions you make each year to all of your traditional IRAs and Roth IRAs can't be more than:

• $6,000 ($7,000 if you're age 50 or older), or
• If less, your taxable compensation for the year

Also, your Roth IRA contribution may be limited based on your filing status and income. Please see  Amount of Roth IRA Contributions You Can Make for 2022 and Modified Adjusted Gross Income for Roth IRA Purposes worksheet for details.

Excess contributions are taxed at 6% per year for each year the excess amounts remain in the IRA. The tax can't be more than 6% of the combined value of all your IRAs as of the end of the tax year.

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.

If you have an excess contribution then please request with your financial institute to have the excess contribution plus earnings withdrawn by the due date. This distribution will have to be reported on your 2022 tax return but only the earnings will be taxable income and subject to the 10% early withdrawal penalty if you are under 59 ½.