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Old 12-05-2006, 03:55 PM   #1 (permalink)
Tilted
 
Location: OH-IO
Traditional / Roth IRA Contributions

Hello everyone,

In the spring of this year I opened both a Traditional and Roth IRA through E-Trade. I understand that both have a limit of $4000 for contributions. (I am under the age level for higher contributions, 22 years old actually.)

However, since I opened the accounts, I have contributed $3700 to my Traditional IRA and $1300 to the Roth.

Am I permitted to contribute more than $4000 per year to both accounts, or is it just permissible to contribute $4000 to one of them? If it is not permissible, what ramifications could result taxwise since I have exceeded the limit?

Thanks in advance.
tornadored is offline  
Old 12-06-2006, 01:36 PM   #2 (permalink)
Wehret Den Anfängen!
 
Location: Ontario, Canada
Some data:
http://www.irahelp.com/cgi-bin/forum...ames/read/3806
http://beginnersinvest.about.com/cs/...ntribution.htm
http://retireplan.about.com/od/rotha.../iravsroth.htm

It looks like the contribution is summed up over both.

I can't see it as possible to contribute 4000$ to both of them. There appears to be a 6% penalty for overcontribution amounts if you aren't fast enough in pulling it out. There are other penalties if you withdraw "earnings".
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Yakk is offline  
Old 12-09-2006, 09:25 AM   #3 (permalink)
Crazy
 
Location: In an office with no windows
If you did not make contributions in 2005 and if some of the contributions were made before April 15, 2006, you may be able to have some of the contributions switched from counting for 2006 ro 2005 (assuming you were eligible in 2005). That way you can avoid paying the penalty.
BadForm is offline  
Old 12-10-2006, 08:17 AM   #4 (permalink)
Tilted
 
Location: OH-IO
Thanks for the insight. After a lengthy conversation with E-Trade the other night, they are able to refund my overage (which was about $990) dollars minus a $25 refund fee, and any taxes on earnings which I made.

Since I had not made any purchases with the contributions, the fund was all cash, and my earnings equated out to be about $0.10. Thus no tax, but a little bit of money for Christmas!

Actually, I will probably use part of it to pay off some Christmas bills, then recontribute it next month as a 2007 contribution.
tornadored is offline  
Old 12-28-2006, 04:53 PM   #5 (permalink)
Psycho
 
Yeah, it would depend on when you put the money in, but for future reference you can put in 4000 total to a Roth or Traditional or combo of the two.
BigBlueWrecking is offline  
 

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