Roth IRA Mistakes, Part 1: EDU #2601

The Retirement and IRA Show

Jim Saulnier, CFP® & Chris Stein, CFP®

Business, Investing

4.3 • 729 Ratings

🗓️ 7 January 2026

⏱️ 72 minutes

🔗️ Recording | iTunes | RSS

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Summary

If you want to skip over some weather banter you can go to (14:15).

Chris’s Summary
Jim and I review Roth IRA mistakes and walk through key rules on earned income eligibility, income limits, spousal contributions, excess contributions, and qualified distributions. We use an Investopedia article as a framework, clarify how MAGI impacts Roth eligibility, explain the October 15 correction deadline, and break down the two-prong test for tax-free Roth earnings withdrawals, including how the five-year rule is measured across tax years.

Jim’s “Pithy” Summary
Chris and I kick off the first EDU show of 2026 by taking an Investopedia piece called “11 Mistakes to Avoid with Your Roth IRA” and using it as our launchpad. We’re not reading the article to you—we’re breaking down what they got right, what they explained too loosely, and what they left out that changes the meaning. We start with the basics that still trip people up: you need earned income to contribute, and a lot of income that feels “earned” (like dividends, interest, rental income, or IRA distributions) doesn’t count. Then we pivot to the opposite problem: earning too much and accidentally making an ineligible Roth contribution because your MAGI crossed the line, often after a late bonus or surprise taxable payout.

We get into a category of mistakes that can create problems with the IRS: excess contributions. We walk through how easy it is to overfund a Roth when you have multiple accounts, and why the correction rules matter more than most people realize. We talk about the October 15 deadline, how the custodian won’t stop you, and why “removing the excess” isn’t always the same as removing what you deposited. We also get into the weird but real quirk where, if you miss the correction deadline, you may only need to remove the excess contribution itself, not the growth tied to it.

We also dig into the qualified distribution rules for Roth earnings, because this is where the five-year rule gets misunderstood. The Roth has to be five tax years old, and you need a qualifying condition—59½ is one, but it’s not the only one. That’s where the article oversimplifies, and where people make avoidable mistakes when taking earnings out too early.

Show Notes: Article – 11 Mistakes to Avoid With Your Roth IRA

The post Roth IRA Mistakes, Part 1: EDU #2601 appeared first on The Retirement and IRA Show.

Transcript

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0:00.0	The retirement and IRA show represents the words and views of the show hosts exclusively and should not be construed as investment legal or tax advice. All information is believed to be from reliable sources. However, we make no representation as to its completeness or accuracy. All economic and performance information is historical in nature and is not indicative of any future results. Any indices mentioned on the show are unmanaged and cannot be invested indirectly. Diversification and asset allocation strategies do not assure profit or protect against loss.
0:23.8	Never make any investment or financial decisions based on information offered on this show
0:26.9	without first consulting your financial legal or tax advisor.
0:29.7	Financial planning services offered through Jim Solnior and Associates LLC, a registered investment advisor.
0:51.2	This is the retirement and IRA show coming to you from beautiful Northern Colorado.
0:55.5	Join us as certified financial planner Jim Sondier, as well as Colorado State University Finance instructor and certified financial planner Chris Stein, teach
1:00.8	you about IRAs, borough in case, annuities, social security, pension plans, and estate planning
1:07.2	in a fun and enjoyable show. Whether you are listening live in Colorado or streaming from their website or iTunes podcast,
1:14.8	Jim and Chris want you to know that they're available to help you plan for your retirement.
1:19.4	Just visit their website at JimHelps.com.
1:22.5	That's Jim H-E-L-P-S.com and click the Meet the Team button on the homepage.
1:28.8	Now here's Jim and Chris with today's show.
1:32.9	Well, hello and welcome to the Retirement and IRA show, EDU edition.
1:38.1	The first EDU show of 2026.
1:41.6	We have done a Q&A show here in 2026 already, but this is the first EDU show.
1:47.9	Last EDU was on New Year's Eve. That was the release. So technically in 2025. So hopefully
1:54.5	2026 is treating you well so far on today's show. We're going to discuss an article that Jim ran across from
2:04.7	Investopedia that is entitled 11 mistakes to avoid with your Roth IRA.
2:12.1	And like we typically do with these articles, we're going to use it as kind of a basic
2:16.1	structure for a conversation because as in most of these articles. We're going to use it as kind of a basic structure for a conversation
2:17.8	because as in most of these articles, they have some good ideas, good topics, but sometimes
2:25.1	miss some of the nuance or the rest of the story or the, you know, the fine print, if you will. And
	...

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