While doing my taxes, I came to the realization that my income for 2015 is above the limit to contribute the full $5500 to my Roth IRA, but below the limit where I am unable to contribute. My contribution limit for 2015 turned out to be $4400 but I had contributed the full $5500; I contributed an excess $1100.
I've seen different suggestions on how to deal with this, but I'm confused about what they all mean and what the ultimate implications are. It seems my options are the following.
- Withdraw the excess from the Roth IRA
- Convert the excess to a Traditional IRA
- Pay a 6% tax penalty on the over contribution
It sounds like the withdrawal is the least painful, but it is now 2016 and I am unsure what the implications of doing this withdrawal would be since 2015 is over; is there an issue with this? If the withdrawal is not an option, is there still time to do the do the Traditional IRA conversion (there is just under a month till April 15th)?
No matter what I do, is there any paperwork I need to file to ensure I do not get audited?
Note: it seems that there is a similar question that at the time of asking does not yet have an answer.