Suppose I make a maximum contribution for the year to my Roth IRA (or any IRA) early in January and suppose the IRA is invested in mutual funds. Then in the following December when the mutual funds pay out dividends and distributions (assuming there is a pay out!) do the additional funds add to the max contribution previously made last Jan and cause a problem which could be penalized by IRS?
Contributions are only what YOU put into the account. Dividends are earnings based on your contributions and what the market pays out.
dividends earned in an IRA are not contributions.
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