Can I contribute to Roth IRA before accumulating the earned income?

[dahiana]

Hello, I am thinking of contributing to my 2021 Roth IRA. I read that you cannot contribute more than your earned income. However, what if I want to contribute at the beginning of the year, meaning before I have received enough earned income?

For example, say I want to contribute $6000 in Feb 2021 for my 2021 Roth IRA, but I have not earned that amount yet--it's money I have saved over the past years. Can I still make this contribution and it won't incur a fee as long as by the end of the year I earn the same amount or more in earned income?

Thank you

[DanaB27 · Accepted solution]

Yes, if you expect to earn at least $6,000 yearly in 2021 then you can contribute the $6,000 to your Roth IRA for the year 2021 in Feb 2021.

If you for some reason earn less than the $6,000 in 2021 then to avoid the 6% tax on excess contributions, you have 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.