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Lev, Tax Advisor
Category: Tax
Satisfied Customers: 28081
Experience:  Taxes, Immigration, Labor Relations
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Client contributed to a ROTH IRA but income is too high. He

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Client contributed to a ROTH IRA but income is too high. He was advised by stock broker to leave the funds in the ROTH and file a form 8606. Is this acceptable?


Hi and welcome back! It seems as you already posted that question - please verify to avoid double charge.

Contributions into Roth IRA are always not deductible - but they are not equal to not deductible contributions into traditional IRA - so based on your information the broker is incorrect.

A 6% excise tax applies to any excess contribution to a Roth IRA.

To avoid a 6% excise tax - the contribution should be either

--Recharacterized the contribution as being made into traditional IRA - that should be communicated with the administrator of the IRA account, or

--Withdrawn on or before the due date (including extensions) for filing your tax return for the year – if that is a contribution for 2010 – we still have time to correct the issue.


Thank for your assistance

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