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Started By
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re: Emergency fund opinions
Posted on 2/12/13 at 10:11 am to Sigma
Posted on 2/12/13 at 10:11 am to Sigma
quote:
Of course but if April 15 passes and you haven't replaced the 5000, then that opportunity is lost forever.
Ya, but if you weren't going to contribute in the first place, then you can't really say you "lost" it when the emergency actually hit.
If you kept in cash in the emergency hit, you lose out on contributing to a ROTH already due to the fact you never did contribute.
Under foshizzle's scenario, at least you attempted to contribute and take advantage of that taxable year. The fact it didn't work out is basically immaterial. No penalty occurs to the contributor and no harm has been done. You just got unlucky with the emergency.
quote:
And let's be honest, it takes a fair amount of discipline to do in the first place.
Some people can't be helped, no matter what advice they are given.
1
Posted on 2/12/13 at 10:21 am to Teddy Ruxpin
A mathematical argument can definitely be made for using the Roth for an emergency fund in this way. My point is that if it is done regularly, the odds of missing out on contribution opportunity are pretty high. Not to mention if >5500 is withdrawn, the total cannot be replaced in a single tax year. IMO an IRA is a retirement account and should be treated like one.
I didn't even mention that the 5k contribution you put in could easily be worth 3k when you might have an emergency, in your scenario. The investment vehicles used for Roths and Em Funds should be completely different.
I didn't even mention that the 5k contribution you put in could easily be worth 3k when you might have an emergency, in your scenario. The investment vehicles used for Roths and Em Funds should be completely different.
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