My max contribution to an ROTH IRA is $7000. I only contributed around $3000 for the year of 2024. How come I am getting a penalty for this?

Forum|Forum|1 year ago
February 2, 2025
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MayaD

For 2024, the total contributions you make each year to all of your traditional IRAs and Roth IRAs can't be more than:

$7,000 ($8,000 if you're age 50 or older), or
If less, your taxable compensation for the year

Also, in addition to the general contribution limit that applies to both Roth and traditional IRAs, your Roth IRA contribution may be limited based on your filing status and income.

2024 - Amount of Roth IRA Contributions You Can Make for 2024

If you’ve contributed too much to your IRA and/or Roth IRA, you can either accept this 6% penalty or take measures to avoid it before the tax filing deadline.

Please check your options in the link: Excess Roth IRA contribution.

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mauroblardonyAuthor

I filled my taxes already. I have a couple of questions:

What should i do next? Should i go to my ROTH IRA (Managed by Fidelity) and withdraw all of my money in the account?

How much should I withdraw to avoid future penalties?

Is there a calculation that i should use to know how much to withdraw to avoid next year penalty?

I have stopped contributing towards my ROTH IRA as of 2/3/25.

Thank you

DanaB27

If your Roth IRA contribution was limited by your MAGI and you want to avoid the 6% penalty then you can either recharacterize the contribution as a traditional IRA contribution or you request the withdrawal of the excess contribution plus earnings by the due date.

If you choose to withdraw the excess contribution plus earnings it is best to withdraw a little more than the excess contribution since the earnings will increase your MAGI and this will change how much you can contribute to the Roth IRA (if you are in the phaseout range).

Please see What happens if I made an excess Roth IRA contribution and How do I amend my federal tax return for additional information.

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