Quick and Dirty Tips

What To Do If You Contribute Too Much to an HSA, IRA or 401k
The Episode You Wrote: Listener Q&A
Using a Guaranteed Stop Loss When Trading

What To Do If You Contribute Too Much to an HSA, IRA or 401k

Posted: 02 Feb 2022 09:13 AM PST

Amanda M. says:

I contributed to my Roth IRA for 2020, but now I realize that my income will exceed the allowable annual limit. Can I fix this error and use the money to contribute to a traditional IRA instead, or do I have to pay a penalty?

Thanks for your question, Amanda. And congrats on earning too much to qualify for a Roth IRA! That's a significant milestone that I'll explain here.

While overcontributing to various tax-advantaged accounts—such as a retirement account, health savings account (HSA), and 529 college savings account—isn't allowed, it can be easy to do by mistake.

I'll answer Amanda's question and explain the contribution limits for various accounts and what happens when you over-contribute to them. You'll learn how to easily correct an excess and avoid costly penalties.

What is an IRA?

IRA is short for Individual Retirement Account or Individual Retirement Arrangement, a tax-advantaged savings vehicle designed for individuals. It's one of my favorite retirement accounts because anyone with earned income qualifies to contribute, even minors. It also offers more flexibility for taking withdrawals compared to other retirement accounts.

No matter how much you earn, you can max out a traditional IRA. However, as Amanda mentioned, there are annual income limits to qualify for a Roth IRA.

Note that the Roth IRA is the only type of retirement account that comes with an income threshold. Other types of Roth accounts, such as a Roth 401(k) or a Roth 403(b), don't have an annual income limit.

You can only contribute to a Roth IRA when your modified adjusted gross income (MAGI) is below the following annual limits for 2020:

Single tax filers can't make contributions when you earn $139,000 or more and increases to $140,000 for 2021.
Married couples filing taxes jointly can't make contributions when your household income is $206,000 or more and increases to $208,000 for 2021.
Married couples filing separate taxes can only make reduced contributions with MAGI less than $10,000 and are ineligible when you earn more.

What happens if you over-contribute to an IRA?

Now that you know who qualifies for a traditional and a Roth IRA let's discuss how much you can contribute and ways to correct an excess.

For 2020 and 2021, you can contribute up to $6,000 to a traditional IRA, a Roth IRA, or a combination of both. If you're age 50 or older, you can contribute an additional $1,000, for a...

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The Episode You Wrote: Listener Q&A

Posted: 01 Feb 2022 04:10 PM PST

If you are a long-time listener, you know that many of the topics I cover on the podcast are suggested by listeners. In fact, after 14 years of weekly episodes, I don't know what I would do without your questions and topic suggestions!

I've gotten a lot of great questions that don't require an entire episode to answer but that I'd love to respond to. Here are five of them. (In most cases, there are related episodes in the archives if you'd like to go deeper!)

Can you get Vitamin E through your skin?

Let's start with one that came in on the Nutrition Diva listener line (443-961-6206).

I have a question about topical vitamin E. I'm aware of that vitamin E supplements should be avoided with people who are taking blood thinners, but I was wondering if topical use would be an alternative way to help.

As I talked about in episode #293, vitamin E is one of the most common nutrient shortfalls. Although you don't need all that much (just 15 mg per day), nine out of ten Americans still fall short on vitamin E. And this listener is absolutely correct that people who are taking blood thinners (or who are preparing for surgery) are usually advised not to take vitamin E supplements. Vitamin E is a natural anti-coagulant and combining supplements with blood thinners can be too much of a good thing.

Vitamin E from foods is not a concern, however, and there are some advantages to getting vitamin E from foods rather than supplements. Most supplements only provide the alpha-tocopherol form of vitamin E, while foods provide a range of the different tocopherols and tocotrienols that make up the vitamin E family. Nuts, seeds, avocado, and whole grains are going to be your primary sources of natural vitamin E. (See this Vitamin E Cheat Sheet for details.)

But vitamin E is also a popular ingredient in skincare products, leading to this listener's question: Could you absorb vitamin E through your skin? And the answer is No.

As I explained in episode #465, while nutrients in topical formulas may have cosmetic effects on the surface of the skin, very little if any of those nutrients are penetrating beyond the skin's surprisingly tough outer layers. That's why we can slather our skin with mineral-based sunscreens all summer long without developing a zinc overload!

Does pre-chopping broccoli make it healthier?

Ross sent in a great question by email:

Does preparation and cooking method have a significant impact on the amount of sulforaphane in broccoli? And does this matter to our health?

Ross also helpfully ...

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Using a Guaranteed Stop Loss When Trading

Posted: 01 Feb 2022 08:22 AM PST

If you don't use risk management tools to protect your investments when forex trading, there is every chance your next trade could be your last.

This statement is especially true if you are an inexperienced or beginner trader. While the forex market is the most liquid of all financial markets – meaning forex movements tend to be small – occasionally an event can occur which can see dramatic changes in forex prices. This can result in significant losses to your finances and can be crippling if you are trading with leverage.

For this reason, it is wise to use a stop loss or guaranteed stop loss when trading forex.

Use a stop loss when forex trading for better risk management

A stop loss is a risk management tool that can help protect you against losses when trading. When you open your position, you can include an instruction to your broker to exit your trading position when a certain forex price is triggered. Should this price be triggered, your broker will attempt to automatically sell your open position.

To set a stop loss, you define your stop limit – which is how many pips away from your entry price you wish to have your position closed. Should this limit be triggered, the broker will attempt to close your position to protect the finances in your trading account.

Justin Grossbard of CompareForexBroker says that as a trader, your challenge is to determine the right place to put your stop loss. There is a fine line between giving your stop limit enough space so that natural market fluctuations don't trigger the stop loss and too much space that you lose more than you should have on a bad trade.

Many traders make the mistake of being too conservative and placing the stop too close to their opening price. This happens because traders make decisions based...

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Food And Recipe Fusion

Thursday, February 3, 2022