What Roth Owners Should Do if They Exceed the Income Limit

You can avoid the penalty if you have your IRA administrator move your 2014 Roth IRA contributions into a traditional IRA.

Kimberly Lankford's avatar
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I contribute monthly to a Roth IRA. My wife and I just realized that our joint income will exceed the $191,000 limit for Roths this year. What should we do? --L.R., Simi Valley, Calif.

You can avoid the 6% penalty on the money you contributed if you take your 2014 contributions (and any earnings on them) out of the Roth before the tax-filing deadline on April 15, 2015 (or October 15, 2015, if you file an extension). The contributions you withdraw are tax-free, but you must include the earnings as income for 2014. You can also avoid the penalty and taxes if you have your IRA administrator move your 2014 Roth IRA contributions (plus all the earnings on that money) into a traditional IRA by October 15, 2015.

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Kimberly Lankford
Kimberly Lankford
Contributing Editor, Kiplinger's Personal Finance

As the "Ask Kim" columnist for Kiplinger's Personal Finance, Lankford receives hundreds of personal finance questions from readers every month. She is the author of Rescue Your Financial Life (McGraw-Hill, 2003), The Insurance Maze: How You Can Save Money on Insurance -- and Still Get the Coverage You Need (Kaplan, 2006), Kiplinger's Ask Kim for Money Smart Solutions (Kaplan, 2007) and The Kiplinger/BBB Personal Finance Guide for Military Families. She is frequently featured as a financial expert on television and radio, including NBC's Today Show, CNN, CNBC and National Public Radio.