Screwed up My IRA Roth

superflunker87 · #1 (**permalink**) 10-28-2008, 01:14 AM

I just found out you're only suppose to fund IRA Roths with earned income only. For the past 3 years, I've only earned about $4000. However, I've fully founded the Roth with about $10000 from student loans. So basically, I overfunded it.

How will someone find out? What's the best way to fix this situation? Thanks in advance.

donnyg16 · #2 (**permalink**) 10-28-2008, 04:34 AM

I would contact my financial advisor immediately and ask them what I should do in this situation before taking any money out of it.

GarySpicuzza · #3 (**permalink**) 10-31-2008, 04:50 PM

Quote:

I just found out you're only suppose to fund IRA Roths with earned income only. For the past 3 years, I've only earned about $4000. However, I've fully founded the Roth with about $10000 from student loans. So basically, I overfunded it.

How will someone find out? What's the best way to fix this situation? Thanks in advance.

First let me say that as a general rule borrowing money to use as a savings or investment is risky business.

That being said with current student loan rates hovering around 2.76% it's not hard to beat that and pocket the spread.

But to answer your question:

Click THIS LINK.

Quote:

What if You Contribute Too Much?
A 6% excise tax applies to any excess contribution to a Roth IRA.