Contribute too much to Roth IRA..

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Joined: Wed Jan 03, 2018 11:57 am

Contribute too much to Roth IRA..

Post by whiteorgo » Thu Jan 04, 2018 4:11 pm

Hey guys,

For 2017 in my Vanguard Roth IRA account, I contributed $4,000. Our MAGI in 2016 was 182k, but my wife and I both got a raise in the middle of 2017 and from my rough calculation, I believe our MAGI for 2017 will be over the limit of 186k. And from my estimated value and calculating the allowable Roth limit, it seems like I can only contribute ~$2500 or so.

So what's the best way to take the money out from Vanguard Roth IRA? Do I wait until I file my taxes and know my exact MAGI and calculate the exact allowable amount and then take it out, or should I take out more than I need right now from Vanguard? (can I even do this anyway?)

Also, this might be a dumb question, but is it possible to take out all $4,000 of my 2017 Roth IRA contribution without any penalty? And then just backdoor Roth $5,500 before April?

Thanks so much!

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Joined: Sat Feb 20, 2016 4:07 pm

Re: Contribute too much to Roth IRA..

Post by victw » Thu Jan 04, 2018 5:35 pm

I'm mostly replying to bump up your question. I do not have much experience with this but I just worked with Vanguard to unwind an "excess contribution" for 2018. Yes 2018. I was unable to kill the auto contribution in time and expect to be over the limits with a combined family income. I decided to withdraw it sooner rather than later.

I don't think Vanguard will guide you on the tax issues - except to say there are some.


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Joined: Fri Mar 07, 2014 1:19 pm

Re: Contribute too much to Roth IRA..

Post by z91 » Thu Jan 04, 2018 5:51 pm

I'm not a CPA, this isn't tax advice..

I went through this exact thing, mine ended up a bit more complicated, but..

If you want to truly maximize your Roth contribution, wait until you file your taxes. Have everything written up come tax season, know your exact MAGI before you submit the paperwork. Before you file taxes, withdraw whatever your non-qualified position is by filling out some paperwork with the custodian. Vanguard offers Docusign which takes about 5 minutes online.

You only get once chance to do it, so make sure you read about it thoroughly before proceeding. You have until October in the year you file to correct it without penalty if you submit taxes on time (e.g., 2016 over-contribution, 2016 taxes filed Apr 2017, you have until Oct 2017 to correct the mistake).

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