I contributed to a Roth IRA for 2015. However, my income for the year exceeds the modified adjusted gross income limit for making Roth IRA contributions. What do I do?

Because your income is too high, your contribution is treated as an excess contribution subject to a 6% penalty. The 6% penalty applies each year unless you take corrective action. You can withdraw the excess contribution, plus any earnings on it, by the due date for the 2015 return (including extensions). However, you will still be taxed on the distribution of the earnings, which are likely very modest.

Alternatively, you can direct the trustee to recharacterize the contribution as having been made to a traditional IRA. Again, this must be done before the due date of the return, including extensions, and must include both the contribution and earnings on it. Whether or not the contribution to the traditional IRA is deductible depends on whether you are an active participant in a qualified retirement plan and, as a result, your income for the year.

Another option, which won’t avoid penalty for 2015 but will eliminate it for future years, is to contribute less than the allowable amount for 2016 (assuming you are eligible to do so). In effect, your excess contribution for 2015 becomes your 2016 contribution; no penalty will apply for 2016.