You are using an outdated browser. Please upgrade your browser to improve your experience. You have a couple of options if you discovered you topped the income limit for contributing to a Roth after you already stashed money in your account.

By Kimberly Lankford , Contributing Editor March 1, What can we do to avoid a penalty? You would report the income earned on it as a taxable distribution from the IRA on line 15 of your Form and pay tax on that amount in your top tax bracket.

But you can avoid all of the penalties if you contact your IRA administrator right away and explain that you just discovered your income was over the limit. You won't be hit with a penalty as long as you have the administrator switch your Roth IRA contributions -- and the earnings on them -- into a traditional IRA by October 15, If you'd already made contributions to the Roth in earlier years, the administrator should calculate how much of the earnings in the account should be attributed to the contribution.

Most IRA administrators have a form making it easy to "recharacterize" the IRA, which is the official term for switching from one type of IRA to another. If you don't already have a traditional IRA account with that administrator, you'll need to open one up.

If you're switching the Roth into a nondeductible IRA, you'll need to file Form to the IRS reporting the nondeductible IRA contributions. For more information, see the Instructions to Form You only need to recharacterize your contributions and the earnings on those contributions.

You can keep any money you've contributed to the Roth in previous years in your Roth account.

The money you switch to a traditional IRA now doesn't have to stay there forever. But that income limit disappears in , letting anyone make the switch. You just need to pay taxes on the earnings or on the full amount of any tax-deductible contribution when you convert the traditional IRA to a Roth, but then you won't owe taxes on it when you withdraw the money from the Roth in retirement.

Roth IRA excess contribution reporting - TurboTax Support

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Excess Roth IRA Contributions

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Publication A (), Contributions to Individual Retirement Arrangements (IRAs)

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