[USER]

Roth IRA income limits.
First year on the bonus program at work!

Meaning that I will either be just under the 146k MAGI, or I will blow past it.

Also possible that they hold the bonus checks until early 2025.

I have contributed $4125 to my roth ira so far this year, and I am on track to max it out by the end of the year.

What steps should I take to mitigate my risk here?

How much trouble am I going to get myself in? Thanks!

[Bill]

There is no risk, just paperwork. If you don’t have a traditional Ira, you can recast the contributions and do a backdoor Roth.

If you have a traditional Ira and can roll it into a current 401k, that also works as long as you do that rollover before the end of the year.

If both of those fail, you just call up and have the brokerage reverse the contribution.

You’ll pay tax on any gains, but that will be minimal.

[Becky]

If you end up going over you can transfer to traditional IRA and then if you want still do the back door Roth.

My husband and I did this for last year as I was laid off in Nov and got paid my severance in advance at end of year

[Matthew]

You will need to do a recharacterization of contributions if you are ineligible based on your income being too high.

There will also be an earnings calculation performed by your trustee to determine how much actually needs to be moved from roth to traditional since contributions gained or lost money while in the roth.

So its not as simple as recharacterizing the exact amount of your contributions.

It could be more or less based on calculation. brokerage firm will be able to accept your request in some fashion (form, online, verbal).

Just call them to find out process.

You have until the tax filing deadline, including extensions, to get it done.

[Scott]

You have until April 2025 to make your 2024 IRA contributions so you can wait until you do your taxes and have certainty on your 2024 AGI.

[Author]

Posts