Roth Ira — too much income results in excess contribution — what to do?
Hi Terry. My wife and I each contributed $7,000 ($14,000) to our Roth IRA accounts at the beginning of 2022. We made more money than anticipated this year and may go over maximum income allowance. Can we take money back out of our Roth accounts if we do end up going over? Thanks.
Terry Says
Just as background for others reading this answer, your eligibility to contribute to a Roth IRA is based on your income level. If you file taxes as a single person, your Modified Adjusted Gross Income (MAGI) must be under $144,000 for the tax year 2022 to contribute to a Roth IRA, and if you’re married and file jointly, your MAGI must be under 214,000 for the tax year 2022.
The short answer to this question is that you can WITHDRAW the excess contribution by the due date of your tax return — next April. But take the time to read the LONGER ANSWER in this article from Investopedia, which explains that you also have to return the “earnings” on that amount! Do it correctly, or you’ll have an ongoing hassle!
