Tax Season & Roth IRA Contributions | Fort Pitt Capital

Tip of the Month: Tax Season & Roth IRA Contributions

Every year we have clients that make Roth IRA contributions. Sometimes a client discovers that they were ineligible to make a contribution (this discovery usually happens when they file their tax return) due to an increase in income for that tax year. The contribution and calculated earnings must then be withdrawn before the tax filing deadline in order to avoid a 6% excise tax penalty by the IRS for this excess contribution. Tip: It is important that you check with your CPA/Accountant first to see if you are still eligible (due to the income limits) to make a Roth IRA contribution for the specified tax year. It is a good idea to take a look in January, at the Income Contribution Limit tables that the IRS puts out each year. These tables identify single filers, joint filers, head of households, etc. and the range of income that each can potentially earn to make a full contribution, partial contribution or no contribution. If you’re eligible to contribute to a Roth (if you and your spouse file jointly and have taxable compensation and … Continue reading Tip of the Month: Tax Season & Roth IRA Contributions

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