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re: Roth IRA- is it considered a liquid asset
Posted on 1/15/13 at 12:39 pm to Springlake Tiger
Posted on 1/15/13 at 12:39 pm to Springlake Tiger
A Roth SHOULD NOT be an emergency fund. At the very worst it should be an emergency fund for the emergency fund's emergency fund. Early withdrawal may not be penalized, but you're penalizing yourself. In an absolute worst case scenario is the only time it's acceptable.
If you have a 6 month emergency fund in a money market/ high yield savings, decent health insurance or HSA, and you have long term disability insurance, you shouldn't ever need to touch your Roth.
If you have a 6 month emergency fund in a money market/ high yield savings, decent health insurance or HSA, and you have long term disability insurance, you shouldn't ever need to touch your Roth.
1
Posted on 1/15/13 at 9:27 pm to Vols&Shaft83
quote:
A Roth SHOULD NOT be an emergency fund.
Completely wrong.
It should be your second line of defense. You can pull out contributions at any time without any penalty whatsoever. In the meantime earnings are tax free. If you instead put money in a regular account you are paying taxes you don't have to pay if you'd put into a Roth.
Your first line of defense should be easy access to credit that you can quickly repay. There's nothing wrong with charging a thousand on your credit card provided you can pay it off with the next statement.
But there is basically no reason at all to have a standard savings account unless you're already maxing your Roth and have nothing better to do with extra cash.
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