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I was looking at the Roth IRA Contribution Limit on the schawb.com site here: Roth IRA Contribution Limits

I can see how much I'm allowed to contribute based on my salary, but what happens if my salary increases or if I get a bonus and have contributed more than allowed at the higher income?

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The limits are based on how much you earn in the entire tax year, not necessarily your salary at that time. If you get a substantial raise and find out that you've already over-contributed based on how much you'll earn for the year, you can either:

  • withdraw the money (including any earnings attributable to it),
  • recharacterize the excess contributions and move them to a traditional IRA, or
  • apply your excess contribution to next year's Roth (you might still incur a 6% penalty for the current year)

If you haven't over-contributed yet, you can pause or slow down your contributions to make sure you don't go over the max for the year. It's common to leave a "buffer" at the end of the year and make a contribution to hit the max after you've gotten all of your income calculated for the prior year. You have until April 15th to make contributions fore the prior year.

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  • Slowing down the contributions is a good idea. Come to think of it, raises and bonuses usually come early in the year so there should be enough time left in the year to contribute the maximum amount allowed.
    – Rich
    Sep 15 at 21:10
  • Sure - the point though is that only the total yearly amount counts for both - meaning you con contribute the max on Jan1, or contribute nothing until Dec31 (really Apr 14), and the limits are based on total pay for the year, not year-to-date.
    – D Stanley
    Sep 15 at 22:00

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