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Level 1

Question

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

Forum|Forum|7 years ago
June 1, 2019
2 replies
0 views

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

TurboTax Deluxe Windows

Level 15

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.

Level 15

garbled answer revised to make sense.

Level 2

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.

Alumni - Champ

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.