To be eligible to make the maximum contribution to a Roth IRA, your Modified Adjusted Gross Income (MAGI) must fall within a certain range.
For more information, refer to our chart on Retirement Plan Limits.
If neither you nor your spouse have earned income, you may not contribute to a Roth IRA; however if you previously established a Roth IRA while one of you had earned income, you may continue to hold your Roth IRA at Harbor Funds without making additional contributions.
Alternatively, you may recharacterize the excess contribution from the Roth IRA into a Traditional IRA by completing the Harbor Recharacterization of IRA Contribution form.
Eligibility for a Roth conversion was greatly simplified when Congress eliminated the $100,000 income limitation as of 2010. There are still some important requirements and rules concerning conversion eligibility, however. The general rule is that if you're able to take a distribution that is eligible for a rollover, you are also permitted to do a conversion.
For information that is specific to your situation, please consult your tax adviser.
When an excess IRA contribution (Roth recharacterization) is removed, not only does the excess contribution (or conversion) amount itself need to be removed, but also any income that was generated by that contribution while it was in that account. If an IRA decreased in value while it contained an excess contribution, the loss that can be attributed to the excess contribution does not need to be removed from the account.
The formula for calculating NIA is shown below:
If you would like to estimate the NIA for your IRA contribution, please click on the link below and complete the Net Attributable Form as accurately as possible.
The IRS provides the formula for calculating NIA in Treasury Regulation (Treas. Reg.) 1.408-11 (26 CFR 1.408-11)
Clarifications to NIA Method
In addition to considering transfers and recharacterizations in the NIA formula, the regulations make other clarifications as follows.
For further questions on Net Income Attributable, please contact a Shareholder Services Representative at 800-422-1050, Monday through Friday between the hours of 8:00 a.m. and 6:00 p.m. Eastern time.