Roth contribution is applicable to a lot of employees from all over the country and annual additions to the fund are a must if you are a participant of the program. But have you made up an earning that is a little too much to go ahead and contribute to a Roth for this year? There are two ways to avoid the contribution and the 6 percent penalty that comes along with it.
Avoid Roth contribution!
The best way to do this is to withdraw all of your contributions and make the inclusion for them as income for this year. Another way to avoid it is to ask your IRA administrator to make the contribution switch and convert the account to a normal IRA. It’s highly recommended to those people who intend to make the transition to get it done before the taxes are filed for this year but if you aren’t up for it yet, know that you have until October of 2016 to make the move.
You can see a substantial reduction in your income (that’s going to get taxed) by changing your scheme to traditional plans such as 401(k) or 457 or even the Thrift savings plan that’s run by the federal government. You will not have to make the Roth contribution in excess this way. Apart from this, you can also make a substantial taxable income reduction if you make a health savings account and make contributions to it.
All in all, it’s always really good to save some of the money that you shouldn’t be losing anyway and there are some good techniques to make sure that your contribution doesn’t make you lose some good hard-earned money. Make sure that you make up your mind quickly so that you don’t have to regret later on.
