ARE CONTRIBUTIONS TO AN EXISTING ROTH IRA "TAXABLE"? (AND I DON'T MEAN "TAX DEDUCTABLE")

[tdill]

when I netered my 2018 roth ira "contribution" of $6500 my taxes due increased. Why? I thought taxes are only taken out at withdrawal.

[fanfare]

try the backdoor Roth.

But if you have traditional IRAs already you can't use that trick unless you are willing and able to convert it all.

[fanfare]

garbled answer revised to make sense.

[netskip]

I made the same mistake.

Contributions to Roth IRAs are only allowed if your income is below a certain threshold.  I think that threshold is $130k.  If I recall correctly, $390 has to be paid in tax every year that you haven't corrected the excess contribution.  Let me repeat that:  Not only do you owe more tax this year, you will owe more tax next year and the year after that because of the one contribution for 2018, unless / until you withdraw the $6500 and all the earnings on that excess contribution.

You can still correct the problem by reversing the contribution and earnings before the tax filing deadline.  You'll need to send a request to your broker.

[SweetieJean]

If you are single, you must have a modified adjusted gross income under $135,000 to contribute to a Roth IRA for the 2018 tax year, but contributions are reduced starting at $120,000. If you are married filing jointly, your MAGI must be less than $199,000, with reductions beginning at $189,000.