Is this example how you would handle MAGI decreasing allowable contribution to Roth IRA?
Round One Example:
Round Two Example:
Round Three Example:
Yes, the earnings on the excess contribution can cause a new excess contribution because it changes your MAGI. Yes, you can request multiple withdrawals of excess contributions plus earnings. Or you can try to withdraw a little extra the first time to avoid the loop.
Please see What happens if I made an excess Roth IRA contribution for other options and additional information.
Yes, the earnings on the excess contribution can cause a new excess contribution because it changes your MAGI. Yes, you can request multiple withdrawals of excess contributions plus earnings. Or you can try to withdraw a little extra the first time to avoid the loop.
Please see What happens if I made an excess Roth IRA contribution for other options and additional information.
An alternative would be to recharacterize the excess to be a traditional IRA contribution instead. This avoids any change in MAGI, but might result in a nondeductible traditional IRA contribution. Because when you have basis in nondeductible traditional IRA contributions you must tracking that basis until you have nothing left in traditional IRAs at the end of some year as a result of making distributions and Roth conversions from your traditional IRAs. Distributions from your traditional IRAs will be a proportionate mix of nontaxable basis and taxable amounts.