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Old 02-06-2012, 10:43 AM
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Roth IRA

If i contributed to a Roth IRA and my AGI is greater than 200K, what are the tax ramifications?



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Old 02-06-2012, 01:08 PM
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“If i contributed to a Roth IRA and my AGI is greater than 200K, what are the tax ramifications?”--->As you can see, a Roth IRA is a specialized type of long-term investment account with various tax advantages. Unlike with traditional IRA accounts, you cannot take a tax deduction for contributions to a R-IRA, but distributions from the account are generally tax-free.The IRS has a set of rules that individuals must meet to be qualified to invest in a Roth IRA. One set of rules pertains to income limits. The only income that counts toward the IRS Roth IRA income limits is earned income,i.e., wages, salaries, tips, bonuses, commissions, and self-employment income. I assume that yo file your return as MFJ, and younger than 50 then, your MAGI, NOT AGI, must be less than $169,000 to contribute up to the limit(annual contribution limit is $5,000/if individuals age 50 and over can contribute $1,000 extra to catch up for a total of $6,000.) . If not, your contribution is reduced. A high MAGI can prevent you from contributing to a Roth IRA.For example, if your MAGI is $200K, then you are ineligible for R-IRA. You can calculate your MAGI by adding back in various income items, such as income you excluded for the foreign income deduction, IRA deductions and educational expenses. The IRS charges a 6% penalty on excesss contributions made to a R-IRA. In addition to the penalty, when the excess amount is withdrawn, the earnings withdrawn are subject to income tax and a 10% w/d penalty.



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