Roth IRA N00B Mistake

[madamwitty]

As I was trying to max out my Roth IRA for 2014 at the Vanguard website today, it turned out I couldn't contribute as much as I thought I should be able to.  Two contributions from early last year (totaling $800) which I had attributed in my mind to 2013 were categorized by Vanguard as 2014. Long story short, I learned you have to tell your investment company if you want to attribute a contribution to the previous tax year. Usually they ask when you're making a contribution between Jan 1 and April 15, but this was a recurring/automatic contribution.

So check your form 5498's, people! (They detail contributions for the previous tax year and usually come out in May.)

I know this is a N00B mistake, but I hope by sharing it here I might prevent other N00Bs from making the same mistake. Or at least the more seasoned investors can get a good chuckle. 

The silver lining is that Roth IRA contributions are not reported on tax returns, so I don't have to go back and do an amendment or anything. (But save your Form 5498's, people!)

[rpr]

Usually they ask when you're making a contribution between Jan 1 and April 15, but this was a recurring/automatic contribution.

I think that automatic investment options default to the year that the contributions are made.

[madamwitty]

Usually they ask when you're making a contribution between Jan 1 and April 15, but this was a recurring/automatic contribution.

I think that automatic investment options default to the year that the contributions are made.

Yeah, I found this out the hard way. Fortunately I figured out how to reclassify the tax year for an auto contribution via the Vanguard website (which you CAN do before April 15) and have already done so for a couple transactions from this year.

[gluskap]

I usually don't do automatic contributions to my IRA or I am sure I would make this Noob mistake too. Unfortunately I made a roth contribution for 2014 before doing my taxes thinking we would be just below the max income since I was on maternity leave for 5 months last year and wasn't working. Turns out our income is too high for roth. So now I have to recharacterize the Roth to traditional and then do a conversion to do the backdoor Roth. So complicated for tax purposes, lol.

[a1smith]

That probably won't last much longer, Obama just proposed eliminating back door Roths in 2016 budget proposal, along with many other items affecting retirement savings.  There is a post already pointing to MarketWatch article.

Roth's phase out at between $181k-$191k.  Nice problem to have.

[Dexterous]

The silver lining is that Roth IRA contributions are not reported on tax returns, so I don't have to go back and do an amendment or anything.

This is beside the point you were trying to make in the original post, but depending on your AGI you can get a savers credit by listing your contributions.  :P

http://www.irs.gov/Retirement-Plans/Plan-Participant,-Employee/Retirement-Topics-Retirement-Savings-Contributions-Credit-%28Saver%E2%80%99s-Credit%29

[madamwitty]

This is beside the point you were trying to make in the original post, but depending on your AGI you can get a savers credit by listing your contributions.  :P

Thanks for the suggestion. Unfortunately (or fortunately!) my AGI is way too high to take advantage.