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For many years, I've been making ROTH IRA contributions without knowing there is a MAGI restriction. Recently, I discovered the fact that my MAGI in the last few years exceeded the limit for contributions. My question is whether Vanguard reports this to the IRS (since they don't know my income), and what should I do about it now?
There are some very helpful contributors at Ed Slott's discussion board. The site requires a log-in registration to submit a detailed question, but you can search and read what others have asked regarding this topic (and other related IRA questions) without logging in as a member.
Short answer: withdraw contributions and earnings for years before 2017 (6% penalty/year, plus tax and possibly early withdrawal penalty on earnings); either recharacterize 2017 contribution as nondeductible traditional IRA contribution or withdraw contribution (and earnings) prior to filing taxes.
While I believe that all IRA contributions (excluding trustee-to-trustee transfers) are reported to the IRS, should that really matter?
Comments
https://irahelp.com/phpBB
Here's one searched article I found on their site (article is a bit dated):
how-i-handle-my-excess-roth-ira-contributions
http://fairmark.com/retirement/roth-accounts/contributions-to-roth-accounts/excess-contributions-to-roth-iras/
Short answer: withdraw contributions and earnings for years before 2017 (6% penalty/year, plus tax and possibly early withdrawal penalty on earnings); either recharacterize 2017 contribution as nondeductible traditional IRA contribution or withdraw contribution (and earnings) prior to filing taxes.
While I believe that all IRA contributions (excluding trustee-to-trustee transfers) are reported to the IRS, should that really matter?
https://www.irs.gov/publications/p590a#en_US_2016_publink1000230873
search for excess contributions