I put in too much this year!

[Guest pochacco]

I put in $2000 early this year for my 2001 Roth IRA contribution as I did the year before. But after roughly doing the tax return calculation, I found out the the joint growth income for both me and my husband is over 150K but still below 16K last year, which means I put too much in. What can I do at this point to correct the situation. This is aparently an honest mistake since we just bearly made it there and had no way of knowing it exactly without doing the tax return calculation.

[John G]

Get a final tax return as your numbers may move around a little. Then contact your custodian and explain the overage if any. With a letter of instructions, they can return the excess to you.

Perhaps you should write to your Congressman and ask why they put an income limit on Roth's. It catches lots of two wage earner families and about 1/2 of the folks in California and NYC where incomes are on the high end of the range. Seems to me that if a Roth is good for a couple earning $149k then it should be equally good for a couple earning $161k.

[BPickerCPA]

Another option is to RECHARACTERIZE the excess Roth contribution into a traditional IRA. That would be cleaner in that you don't have to pay tax on the earnings on the excess contribution.