ROTH IRA - Change during the Year for Max

Investing
#1

I believe the ROTH IRA income limit is around 125-130k a year, in which you would have to do the backdoor roth ira through a traditional ira and can’t qualify for Roth IRA anymore.

At the beginning of this year I started my contribution for the 6k for 2022 when I wasn’t making the income limit, BUT I ended up getting a new job/receiving a raise that would put me OVER the 125-130k a year salary restriction. What should I do now? Should I continue to max out my Roth IRA that I started earlier this year or should I stop contributing now and transfer that money over to a regular IRA with no income limit? I don’t know the repercussions of keeping my current amount in the 2022 Roth IRA but afraid I will be taxed or have repercussions for contributing to a roth ira with over the income limit. Any advice would be great, thank you so much.

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#2

If you contribute to a Roth IRA and you end up not being eligible, you essentially have to undo that contribution. You can “recharacterize” that contribution as a traditional IRA contribution, or you can just withdrawal it (accounting for any associated gain or loss). Both of these would be accomplished by contacting your brokerage and explaining it to them. If you’re gonna have to do it anyway, you might considering waiting until early 2023 when you’re sure of your full 2022 income. You have until tax day 2023 to sort out the 2022 contribution.

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