too much in Roth IRA last year - now what

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6 years ago 03/19/2018 2:01pm EDT

Trying to figure this out. I think we'll make too much this year (file jointly with wife) to just pay the 6% hit and not contribute to it directly this year. Options - 1) not contribute to it this year and file separately for 2018 where I'll be under the income limit as an individual, but this will carry over the earnings over the 5,500 into 2019 and have to pay 6% on that excess then, too, 2) convert to a traditional IRA (but then have to amend 2017 returns), 3) withdraw and take 10% hit....

Anything else?

I'd rather not touch it, but not sure what's best.

6 years ago 03/19/2018 2:08pm EDT

re: themack

I think you've mistaken this site for letsaccount.com

6 years ago 03/19/2018 4:35pm EDT

re: themack

In order to accurately respond I need a little more information:

What's your 10k time?

How much mileage are you running?

6 years ago 03/19/2018 6:38pm EDT

re: themack

Is this for 2017? If so why would you have to amend your returns. They aren't due until April and if you're not certain of your income you probably haven't completed your returns.

I'm not an accountant so double check this, but I've been through this. Just take the money out of the Roth and put it into a traditional ira. You will have to probably pay taxes on the gains. I doubt there would be a penalty if it's all happening in the same year (or before the tax deadline).

If you want, look into backdoor Roth conversion. This works well of you don't have other pre tax personal retirement plans.

A little complicated, but if you search for that you'll get some good advice.

6 years ago 03/19/2018 7:28pm EDT

re: Sunflower

thanks

I understand the back door conversion - to be honest I can't remember if I did that with my contribution, but I don't think so based on what I'm seeing with my transaction records. We already filed for 2017 so if it was converted to traditional, I'd have to amend based on the gains. Then, I couldn't convert that back, right - without the same penalties?

Appreciate the real response. I'll contact someone.

6 years ago 03/19/2018 10:38pm EDT

re: themack

If you did a conversion your brokerage would tell you. You'd get a form saying you had a distribution from your traditional ira. Check with them if you aren't sure.

As far as moving it back. There are reasons that you are allowed to remove money from a Roth ira without penalty (buying a home, etc) but beyond that you're going to pay a penalty if you take it out.

Like I said, I'm not an accountant or tax professional, but I've been through this enough to offer advice since you aren't getting any other help.

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