It appears my MAGI for 2019 will exceed the allowable limit for Roth IRA contributions or at-least in the phase out stage and possibly for 2018 as well. Currently, I contribute monthly to reach the annual $12k max contribution for my wife and I's Roth's.

1) What do I do about the money that was already contributed in 2018 if I am indeed over the limits and by what date does this need to be done? Any penalties that I should be aware of and ways to avoid/minimize them?

2) Moving forward for 2019, can I still contribute monthly and do a conversion after each deposit? Also, I was thinking about contributing monthly to my Barclays savings account (2.2% interest) and doing a one time IRA to Roth conversion.

Any help is appreciated

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Posted by castorinho

13623 posts

Member since Nov 2010

82010 posts

Posted on 1/28/19 at 5:52 pm to readysetgeaux

quote:
1) What do I do about the money that was already contributed in 2018 if I am indeed over the limits and by what date does this need to be done? Any penalties that I should be aware of and ways to avoid/minimize them?

you're fine. You have until the tax return filing deadline to correct it.

quote:
Also, I was thinking about contributing monthly to my Barclays savings account (2.2% interest) and doing a one time IRA to Roth conversion.

just do the latter.

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Posted by readysetgeaux

Member since Jun 2012

203 posts

Posted on 1/28/19 at 8:02 pm to castorinho

quote:

you're fine. You have until the tax return filing deadline to correct it.

What about any earnings? I assume these are taxable and Vanguard and Fidelity will give me the ability to track earnings on those specific contributions.

One more question. I currently have access to a 401k and Roth 401k. I have been putting 9% to Roth and 3% towards traditional. Is there any benefit in changing my elections to stay under the income limits for Roth IRA compared to back door Roth aside from owing less in taxes this year?

This post was edited on 1/28/19 at 8:07 pm

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