Is there any cost advantage in making excess Roth or traditional IRA contributions?

Question

Excess IRA contributions are taxed at 6 percent.

Answer 1

Not only are the Excess Contributions taxed at 6%, but you have to withdraw the money as well. So if you exceed the contribution limit by $1,000, then you would have to pay a $60 penalty for nothing, as well as an Early Withdrawal penalty of 10% depending upon how soon you withdraw the funds.

Does this make sense? I think you just need to re-read the IRS rules on Excess IRA Contributions. It seems you misunderstood what it was saying.

Answer 2

there is not any regulation that i'm attentive to that calls for a minimum month-to-month contribution to a Roth IRA. after all, i advise looking brokerage corporations alongside with the forefront team or fidelity Investments for a Roth somewhat of a economic corporation. Brokerage corporations charge decrease prices than banks, and also you are able to make a contribution/ upload money once you want to with out month-to-month criteria, yet maximum require $one thousand or more advantageous for the initial funding once you open the account.

Answer 3

John John, he is talking about the "Extra" contributions being taxed, not the legal ones.
It is not permitted, besides the tax I think there is a penalty if you don't "recharacterize" in time, so it is not worth it. If you don't want to pay much tax, why not invest in a "Tax-efficient" mutual fund in a regular taxable account.

Answer 4

roth is the best way to go.
it is not taxed at all if you start taking payments at 59 1/2.
once you contribute it has already been taxed.
given the debt in the u.s., tax rates are going to go up.
it is a win win way to go.

Answer 5

I think no