Roth IRA year to year contributions and limits.

Submitted by Vincent Lamb on Fri, 2019-09-20 22:37

I currently qualify to contribute up to $6000 per year to a Roth IRA (Let’s say I’m 30 years old, my modified AGI is $50,000 yearly and I file Single.) I do understand that contributions for 2019 can be made between January 1st, 2019 – April 15, 2020 to count towards the year 2019 contributions correct? So, I deposit funds to this Roth IRA account as follows: A payment of $428.57 on the 5th of each month starting January 5, 2019 – February 5, 2020 (14 payments totaling $5999.98.) On February 2, 2020 I withdraw $2000 from this Roth IRA account. On March 1, 2020 I deposit $1000 into the Roth IRA account and on April 1, 2020, I deposit another $1000 into the Roth account, bringing the total contributions for the year to $5999.98 ($7999.98 – $2000).

My questions are:

1. The $5999.98 total that I deposited between January 1, 2019 and April 15, 2020 all counts towards 2019 contributions correct?

2. If so, how much money can I deposit into my Roth IRA account for the next year (2020?) Can I deposit $6000 into the account let’s say on May 1, 2020?

3. Does any of the money that I deposited into the account between January 1, 2020 and April 15, 2020 count towards the $6000 contribution limit that I can make in 2020? Why or why not?

4. What if I deposited the $6000 into the account on May 1, 2020 and then deposit another $5000 into the account on February 1, 2021; have I exceeded the contribution limit for 2020 by $5000? or does the $5000 deposit count towards the 2021 contribution limit since I’ve already deposited $6000 for 2020?

That part confuses me. I do not want to exceed the contribution limits for any year and then get penalized by IRS until corrections are made so I definitely need the correct answers to these questions, if anyone can assist with answers. I apologize for the long post and I apologize for any confusion. Hopefully this can help someone else avoid penalties and also clear up some confusion for me and others.

Thank you everyone for reading and any responses are greatly appreciated.



Submitted by Alan - IRA critic on Sat, 2019-09-21 15:24

  1. Yes, correct. However, if the contributions are automatic draws from some other account, the ones made after 1/1/2020 could be assigned to 2020. You must be sure that the IRA custodian knows to assign them to 2019, and that may not be possible. To avoid a mess, call your Roth custodian to see what your options are.
  2.  Your 2020 regular contributions can be made anytime from 1/1/2020 to 4/15/2021. Contributions made after 4/15 must be assigned to 2020, but those from 1/1/2020 to 4/15 could be for either year. You must find out how the custodian is assigning any of these contributions (per above). Any contributions you send in by check should be clearly flagged for the year they apply to. Write it on the check or deposit slip, if applicable.
  3.  See above. You must be sure the custodian knows which year applies for each deposit. Your custodian might have a default rule stating that any unspecified deposit will be automatically assigned to one year or another. This is easier if you make fewer contributions, since there are fewer that could be mis assigned. Check your statements during this period to see if the contributions during this period are assigned to the correct year.
  4.  The 6000 contribution will automatically be for 2020 since it is not in the 1/1 to 4/15 period during which you can contribute for either year. The 5000 contribution however is in that 1/1 to 4/15 period. You will have to make sure it is flagged to apply to 2021. Your custodian may or may not catch any errors that you make if you have already reached your limit for a year.
  5.  Regarding your withdrawals – you can only return this money by a 60 day rollover, and you can only roll over one distribution within a 12 month running period. Therefore, if you withdraw 2000 on 2/2/20, you must roll that amount back no later than 4/2/2020. You can roll back on different dates as long as the entire 2000 is back by 4/2. Be sure you tell your custodian that these 1000 contributions are rollover contributions, not regular contributions because you have already accounted for your regular contribution limit.
  6. I hope some of these scenarios are just designed to understand the rules, and you do not intend to actually have this many transactions on the dates stated. Far too complex and error prone with too many transactions in the problematic 1/1 to 4/15 period. Also, taking withdrawals at the same time as you are making contributions during this period. If you end up with an excess contribution, it will require removal and either a 6% excise tax or a 10% penalty on any earnings you withdraw. It will also complicate your tax filing, produce additional 1099R forms etc.


Submitted by Vincent Lamb on Sat, 2019-09-21 18:08

Wow! Best explanation I’ve ever received for any questions asked online.  Easy to understand and writtin so it’s easy to understand .  Thank you so much for answering the questions exactly as they were asked and also offering valuable information and suggestions.  much appreciated…



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