topic Roth excess earnings increasing MAGI in Retirement tax questions

Roth excess earnings increasing MAGI

hangry22 — Mon, 09 Mar 2026 11:14:31 GMT

Married filing jointly - I am 50 years old and contributed $7,000 to my Roth IRA in March 2021 for the 2021 tax year. My wife went back to work in the fall, and that additional income (total AGI of 201,461) pushed us over the minimum (but not the max) limit for IRA contributions - (198K - 208K for married filing jointly). I contacted my broker and had them remove the excess ($2422), and they calculated $252.16 in earnings on the excess. They are not giving me a 1099-R, but if I plug these numbers into Turbo Tax it now calculates our AGI as 201,713 (the original + $252 in earnings), which would now put me about $2600 over the allowed contribution, and Turbo Tax is warning me about that excess and saying I need to pay the penalty.

If I contact my broker again and have them pull out another $180, then they will calculate earnings on *that*, and that will adjust my AGI still further, and so on, with each earnings amount getting smaller until it drops below a dollar.

How do calculate my AGI against earnings without removing the entire $7K to make sure that I am absolutely not over the limit?

Re: Roth excess earnings increasing MAGI

hangry22 — Sun, 10 Apr 2022 22:27:22 GMT

Additionally, Turbo Tax does not even warn me about having overcontributed until I have entered that 1099-R manually. If I delete the 1099-R, then I get no warnings whatsoever.

Re: Roth excess earnings increasing MAGI

dmertz — Mon, 11 Apr 2022 02:34:43 GMT

Yes, this is a problem with you are in the phase-out range for Roth IRA contributions. Gains required to accompany the returned contribution increase your income, making more of the original contribution be excess. It might be simplest just to pay the 6% penalty on the additional amount of excess contribution and resolve the excess in 2022 by making a regular distribution equal to the additional amount of excess, allowing the gains on the additional excess to remain in the Roth IRA.