Roth IRA'a and Earned Income

[TuffNuts]

I have already fully funded my Roth IRA for 2015. What are the tax ramifications if I have no earned income for the year. Due to several factors this my be the case for me.

Thanks in advance

[gauss]

I believe that your contributions would be above your limit of 0 in case you have no earned income. Are you filing single? If your spouse has earned income that would help you if you are filing jointly.

These "excess contributions" (and the earnings) can be removed by working with your IRA company.

If this is a case you will need to pay tax on the earnings next year and also a 10% penalty on the earnings if you are under 59 1/2.

A 1099-R will be issued to this effect.

-gauss

[TuffNuts]

Thanks! My wife does, indeed, work. And we do file jointly.

[gauss]

From the IRS at Retirement Topics - IRA Contribution Limits

Quote:

Spousal IRAs If you file a joint return, you may be able to contribute to an IRA even if you did not have taxable compensation as long as your spouse did. The amount of your combined contributions can’t be more than the taxable compensation reported on your joint return. See the formula in IRS Publication 590-A.

Also remember that as your joint income approaches $200,000 (ie somewhere in the high 100,000's depending on the year) your ability to make Roth contributions is reduced/eliminated.

-gauss