Because my 401k is limited to a list of about 30 items, I can't buy what I want, such as QQQ or Apple or Google stocks.

So the only way for me is to invest in Roth IRA.

However, there is this rule: Modified Adjusted Gross Income (MAGI) must be under $144,000 for tax year 2022 and $153,000 for tax year 2023

So let's say for the year 2023, if I earn $152,950, then I can invest in Roth IRA, but if I "accidentally" earn $51 more, which is $1 over $153,000, then my whole Roth IRA is invalid and is subject to penalties?

It really does not make sense if it is like this, but is it like this? If so, what is a way I can get around it? (such as put cash into Traditional IRA and wait 7 days and "convert" it to Roth IRA?).

  • Side note - if you're making $150k, you probably shouldn't be using a Roth anyway - you'd be better off getting the tax break now and putting more in a Traditional 401(k) and IRA since you're in a higher tax bracket.
    – D Stanley
    Commented Feb 16, 2023 at 14:46
  • 1
    @DStanley it may not be the case, isn't it? Because compounding can have a great effect, so I may not want to be taxed after the compounding, so therefore I hope to use Roth IRA. I would rather pay tax before the compounding before the great effect comes in Commented Feb 16, 2023 at 14:59
  • 1
    If you put the tax difference in the Trad IRA then the end result is the same - you'd be taxed on a much larger number since you'd be compounding a higher starting value. The Roth vs Trad bet is that your tax rate now is lower then it will be at retirement (i.e. get the tax break now and compound less or compound more and pay tax later). Look up some questions here or ask a new question if you want a more detailed explanation.
    – D Stanley
    Commented Feb 16, 2023 at 15:14
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    @DStanley if OP is also participating in a 401k, they'd be over the income limit to take a tax deduction on their trad IRA.
    – Stan H
    Commented Feb 16, 2023 at 15:50
  • My point is that they should probably be using the traditional 401(k) instead of a Roth (despite having fewer investment choices). I said Trad IRA incorrectly which probably hid my point. If they want to contribute on top of the 401(k) then yes a Roth is the only option. If there is a match then they should ABSOLUTELY use the 401(k).
    – D Stanley
    Commented Feb 16, 2023 at 18:51

2 Answers 2


The Roth IRA was introduced as part of a package of tax cuts and tax shelters for lower- and middle-income taxpayers. So, yes, the income limit does reflect a certain relative lack of concern for people earning almost triple the national median individual income, and more than double the national median household income.

As for how to get around it, you already seem to be aware of the "backdoor Roth conversion" so I'm not sure what to add there. Whether a 7-day waiting period is necessary or useful is unclear, but there is no evidence of the IRS contesting backdoor conversions, and some evidence (overstated slightly by that article, IMO) that they are knowingly allowing them.

EDIT: I should also mention that your understanding of the Roth IRA contribution limits is not quite right. The numbers you mentioned are the limit at which one can make any contribution to a Roth IRA. At $152950 you would be able to contribute only a very small amount; to contribute the full amount, you would need to make less than $138k. So earning an extra $51 would make virtually no difference to your retirement investment situation.


It is your contribution to your Roth IRA that is invalid, not the entire Roth IRA (money (legally) contributed for for previous years plus earnings accumulated within the Roth IRA). Also, as Sneffel'a answer points out, your numbers are incorrect: the allowable Roth IRA contribution starts reducing starting at $138K income (for single persons) and zeroes out for incomes of $153K or more. So, at $152,950 of MAGI, you are already restricted to just a few dollars of allowable contribution to a Roth IRA.

If you have already made your Roth IRA contribution for 2023, then, if you discover in 2024, as you start preparing your 2023 tax return, that your MAGI is larger than $138K, you have two options. You can either withdraw your entire contribution plus any earnings from it by April 15 2024, or recharacterize your distribution by telling your Roth IRA custodian to treat the contributed amount as having been made to a Traditional IRA, also by April 15, 2024. You can then do a Backdoor Roth IRA by rolling over that amount into your existing Roth IRA; there is no time limit for doing this.

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