I was not aware that as a retired person with no earned income, I was not allowed to contribute to a Roth IRA. I contributed $7,000 this year. Now what?

[Bsch4477]

Talk to your plan administrator about removing the contribution and any earnings. 

[Opus 17]

This is the standard answer:

You have until April 15, 2025 to complete a process known as "removal of excess contributions."  This is a special procedure, not a regular withdrawal.  You will withdraw the excess contribution AND any earnings attributable to the excess contribution.  The earning are taxable income on your 2024 return, even if you do not complete the procedure until 2025.

If you leave the money in the account, you will pay a 6% penalty, and an additional 6% penalty for every year in the future that the money remains in the account.  

This is the loophole answer if your contributions earned more than 6% in 2024.

Leave the excess contributions in the account. Declare them as excess contributions and pay the 6% penalty.   Then, in 2025, make a regular withdrawal of at least $7000.  That will remove the excess so you don't pay another 6% penalty in 2025.  You do not need to withdraw the earnings from the excess, which will remain in your account to earn more money tax-free.

If your investments made more than 6% in 2024, leaving the money in the account and paying the penalty this year, and removing the excess tax-free next year, will result in paying less tax overall.

[fanfare]

"If your investments made more than 6% in 2024,"

Current earnings, may disappear as you wait another year.

@snowite327 

[fanfare]

return of excess contribution:

before tax filing date including extension: positive earnings allocable to the excess are included in income on 1040 Line 4b for the year of the contribution. negative earnings are ignored; in any case, for purposes of basis, consider the original contribution amount as returned.
["Include the earnings in income for the year in which you made the contributions, not the year in
which you withdraw them."]

You must have a) filed by tax day, or b) requested an extension of time to file by tax day to take advantage of the Oct 15 deadline.

positive earnings removed are no longer penalized 10% if you are under age 59 1/2. (eliminated in 2023)

@snowite327