Penalty for Roth IRA investments?

[Mary Jay]

Hi guys,

Lets say a person puts money into a Roth IRA, but then few years later, IRS penalizes this person because this person was making too much money. What would that penalty look like?

In 2019 I believe for a single person max income limit was 139K..

With my job and all the investments I am afraid what if I am making more than 139K in MAGI (Modified Adjusted Gross Income)? I am not an accountant so I am afraid that I may make a mistake in calculating MAGI not not knowing about it and later on the IRS will penalize me for investing into Roth IRA. So if that happens, what kind of penalty does the IRS put on people?

Thank you!

[Mark S.]

@Mary Jay, no problem.  

1.) Technically, these are conversions (not rollovers).  You can do multiple conversions    

2.) 401(k) will not affect your ability to do what you've mentioned - which is to ultimately get money into your Roth IRA regardless of your income.

Google back door Roth IRA and/or Roth conversions. For extra credit, research IRA aggregation rules regarding Roth conversions.