What happens if you contribute too much to your Roth IRA? Believe it or not, it’s much easier to do than you might think. How? Suppose you max out your Roth IRA contribution at the beginning of the year, then as the year progresses, you receive a raise, a bonus, or perhaps your spouse goes from unemployed to employed. All of these events could increase your Modified Adjustable Gross Income (MAGI).
If changes in your MAGI and what you earn are substantial, it’s quite possible that your maximum Roth IRA contribution limit for the year will decrease – maybe even to zero. Under such circumstances, if you’ve already made a Roth IRA contribution assuming a certain contribution limit and that limit subsequently decreases, then the result is an excess Roth IRA contribution.