Question by phxsunsfanaz: What do you do when you make Roth IRA contributions for a year in which your annual income exceeds the limits?
Let’s say a couple made Roth IRA contributions for 2005 in Feb 2005. In 2006, they realized that their 2005 income was much higher than they originally expected and exceeded the $ 160K limit for couples. What are the options available now to undo it?

Best answer:

Answer by ThaneTheBrain
You better talk to a tax person. If you’ve filed already, and took the deduction, then you’ll have to amend. But if you went to file and realized your mistake, they can help you back out your money.

What do you think? Answer below!

A) are taxed, but the interest in the fund accumulates tax free
B) reduce your taxes, but the interest income on the IRA is taxed in the year that it is earned
C) reduce your taxable income. the funds in the IRA and the return on the IRA are not taxed until the funds are disbursed in your retirement years.
D) are not taxed once when they are placed in the IRA and again when they are disbursed from the IRA

I guess I am asking WHY that is the law. I’m assuming lawmakers didn’t blindly choose $5,000 as the cap….

I have both a Traditional IRA and a Roth IRA. Each IRA has a maximum annual contribution of $4000. Is this maximum for each type or IRA individually, or is it a total for all IRAs?

If it is per type, then I could contribute $4000 to my Roth, and $4000 to my Traditional in the same year.

If it is total, I could contribute $4000 split between the two.

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