Yes, there are limits to how much you can contribute to a Roth IRA, and if you contribute more than allowed, you will be penalized until the contributions are removed from the account.
The basic rule for contributing to a Roth is:
"If contributions are made only to Roth IRAs, your contribution limit is generally the lesser of:
- $6,000 ($7,000 if you are age 50 or older), or
- Your taxable compensation."
Compensation includes wages, salaries, tips, professional fees, bonuses, and other amounts received for providing personal services." -IRS Publication 590-A
If you are completely retired with no W-2 income, or self-employment income, your compensation is $0 and your allowed contribution is $0.
This isn't a new rule, so if it hasn't come up for you in the past, you either had some compensation income, or you didn't enter any information about your Roth contributions in TurboTax.
There are also limits for taxpayers whose income is more than $214,000. If that applies, follow this link to find out more.
To correct this situation, you need to withdraw the excess contributions as soon as possible. Contact the trustee of your Roth IRA and let them know the contributions were excess contributions.
Any excess contributions withdrawn before the due date of your tax return are treated as having not been made, so you can avoid the penalty for your 2023 contributions.
You will need to look at the other returns you have filed since you retired to see if you made excess contributions in the past.
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