DIY Money | Personal Finance, Budgeting, Debt, Savings, Investing Married Filing Separately and Roth IRAs
Mar 24, 2025
The hosts dive into the intriguing world of tax strategies for couples, specifically the pros and cons of filing separately. They tackle how this status affects Roth IRA contributions and student loan payments, offering valuable insights for smart financial planning. They also explore effective methods to correct any over-contributions to retirement accounts without penalties. Plus, a discussion on the joys of personal travel adds a refreshing touch, emphasizing self-reflection and the beauty of breaking away from routine.
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Correcting Roth IRA Over-Contributions
- If you over-contribute to a Roth IRA, withdraw the excess funds by the tax deadline.
- Include any investment growth when calculating the withdrawal amount.
Recharacterizing Roth IRA Over-Contributions
- Recharacterize the over-contribution by moving it from a Roth to a traditional IRA.
- Consult the custodian holding your Roth IRA to facilitate this process.
Applying Excess to Future Years
- Apply the excess Roth IRA contribution to the next year's contribution limit.
- Be aware of potential 6% penalties if the excess isn't fully applied.