Author Topic: Does dividend reinvestments count towards the Roth IRA contribution limit?  (Read 2513 times)

jwilliams0215

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I understand the $5,500 Roth IRA contribution limit ($6,500 if you are age 50 or older) and there are income based phase-outs.

However, I have my Roth IRA invested in the Vanguard REIT Index fund with dividends/distributions that are set to reinvest in the fund. Do the dividends/distributions count towards the $5,500 contribution limit?

Thank you!

Spork

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I am not aware of any circumstance where reinvested dividends count against your limit.  It's contributions only that matter.  And there's not really a good method I'm aware of to NOT re-invest dividends.  They are inside the Roth "box" and they stay there.

Where the dividends matter is later.  If you decide to go with a withdrawal mechanism in early retirement where you start taking money out of your Roth before age 59.5... you will only be able to take out the contributions (not the re-invested dividends) without penalty.

SeattleCPA

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I understand the $5,500 Roth IRA contribution limit ($6,500 if you are age 50 or older) and there are income based phase-outs.

However, I have my Roth IRA invested in the Vanguard REIT Index fund with dividends/distributions that are set to reinvest in the fund. Do the dividends/distributions count towards the $5,500 contribution limit?

Thank you!

No.

cchrissyy

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no, the money your money makes while in the IRA is not a contribution.

gliderpilot567

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no, the money your money makes while in the IRA is not a contribution.

Before too long, the IRA will bring in more money into itself than you are allowed to contribute. Which will be a nice feeling.