If you earned a raise last year and your Roth IRA contribution suddenly vanished, you are not imagining things.
The income limits that decide who can fund a Roth are adjusted most years, and they are lower than most people assume.
Cross the line by even a dollar and the door can close for the year.
Single filers can contribute the full $7,000 until modified adjusted gross income hits $150,000, then the allowance phases out and disappears at $165,000.
Married couples filing jointly get more room: full contributions up to $236,000, with the phase-out ending at $246,000.
That sounds generous until you remember what counts as income.
A bonus, a side hustle, a capital gain from selling a rental, or a year-end distribution from a fund can all push your modified AGI over the threshold.
Two schoolteachers with a rental property can trip the limit faster than a surgeon with a quiet portfolio.
The result is a strange kind of tax limbo.
You are earning enough that Congress decided you do not need the tax break, but not enough to feel rich.
Meanwhile, the same paycheck is getting eaten by grocery bills, insurance, and rent that never stop climbing.
The IRS does give you an escape hatch, but it is easy to miss.
If you already put money into a Roth and then discover you exceeded the limit, you can withdraw the excess plus earnings before the tax filing deadline.
Miss that window and you owe a 6 percent excise tax for every year the money stays in.
There is also the backdoor Roth, a legal maneuver that high earners have used for years.
You make a nondeductible contribution to a traditional IRA, then convert it to a Roth.
The catch is the pro-rata rule, which can trigger a tax bill if you also hold pre-tax money in a traditional IRA.
The limits exist because Roth contributions are made with after-tax dollars, and the government wants to cap how much tax-free growth it hands out.
But the thresholds have not kept pace with the way real incomes move.
A cost-of-living raise can cost you a tax-advantaged account.
If you are near the line, check your modified AGI before you contribute, not after.
Ask your payroll or tax preparer to project your year-end number, including bonuses and investment income.
And if you are married, remember that filing separately slams the phase-out down to near zero.
The bigger story is that a retirement tool sold as simple has become a puzzle for the middle class.
Savers who follow the rules can still get locked out by a good year at work.
Final Thoughts
That is worth knowing before April, not after.