[USER]

Hi, I’m thankful to have a good problem where I contributed to a Roth IRA last year (with Betterment) but ultimately made too much money.

I’ve read that I’ll have to take out the contributions and any gains from those contributions – do you know if Betterment has any resources to calculate how much I need to take out?

I want to make sure to get it right in case I get audited.

Also, now that I have excess funds I can’t contribute there, is a taxable investment account the next best stop?

I’m already maxing out my 401k.

Thanks!

[Jule]

You can contribute to the Roth IRA through the backdoor. This is tax loophole for high earners that removed income limitations.

This involves opening and contacting to a traditional IRA and then immediately convert it to Roth.

Sane end destination, it just takes an extra step.

You’d need to call Betterman and characterize the money you contributed last year.

[John]

I would also add, some 401k plans offer the ability to do “mega” backdoor contributions.

You might look into your plan documents to see if they offer after-tax contributions and ability to do do in-service rollovers or distributions to basically add after-tax money and then conver the same day to the Roth 401k option.

The key is the plan must allow it.

Finally, it is always good to have assets in taxable accounts too. Tax diversification is a good thing (some tax-free, some taxable, some tax deferred).

[Jamie]

If you can’t do a backdoor Roth IRA for some reason, which would be my first choice, you need to call them and have them fill out the overcontribution form.

This is not something you calculate yourself or do on your own or it will report as an ordinary withdrawal

[Joel]

Yes, Betterment MUST help you FIX this.

You are NOT able to do it without their help.

[Author]

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