Mar 1

My wife and I have Roth IRA’s. We’re close to the income limits. I would like to setup a monthly contribution rate, but I don’t know if I will over contribute because of year end bonuses.

Should I contribute once, at the end of each year (I know I’ll miss out on the interest)?

I also read about being able to contribute some into a roth and some into a traditional IRA. If anyone can clear this up it would be helpful.

Either way, what would happen if I over contribute?

Thank you.


2 comments so far...

  • Sufi Said on March 1st, 2010 at 12:51 pm:

    what are the income limits? i had my financial advisor set my contributions to be exactly the amount allowed. so i didn’t figure it out myself. i thought if you go over the limit it just means you have to pay taxes later when you draw the money out.
    cuz that’s the thing about roth ira, you fill it up with already taxed money then it’s tax free when you take it out.
    really i don’t know but i’m interested in the question and what you mean by income limits. because i’m over the income for everything else like hope & lifelong learning and just about everything else.

  • Joe T Said on March 1st, 2010 at 1:22 pm:

    If you need to know the income limits for Roth IRA eligibility you can look here.ttp://personal.fidelity.com/products/retirement/getstart/aboutira.shtml.cvsr

    Should you end up making too much and not qualify for a Roth IRA you can either withdraw the money as an excess contribution, or complete a re-characterization form to move the contribution to a traditional IRA. Depending on your income and other factors such as participation in an employer sponsored retirement plan, the re-characterized contribution may be deductible or may be considered a non deductible contribution for the tax year in question.

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