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Posted on 2/26/10 at 4:20 pm to jmtigers
quote:
If you have to withdraw the money you can't just put it back in when you recover from the emergency.
Which is the biggest reason I vote no for the roth as an EF.
Posted on 2/26/10 at 4:38 pm to jmtigers
quote:
If you have to withdraw the money you can't just put it back in when you recover from the emergency.
That in no way relates to using vs. not using a Roth to fund an emergency though.
Posted on 2/26/10 at 4:39 pm to Cash
quote:
Which is the biggest reason I vote no for the roth as an EF.
Explain the logic...
You only raid the Roth as a last resort. If you do have to raid the Roth, that means you didn't have cash to put elsewhere OR to max out the Roth. In other words, you're not losing anything because you didn't hit the annual limitation to begin with.
This post was edited on 2/26/10 at 4:49 pm
Posted on 2/26/10 at 9:14 pm to Dusty Bottoms
quote:
Explain the logic...
You only raid the Roth as a last resort. If you do have to raid the Roth, that means you didn't have cash to put elsewhere OR to max out the Roth. In other words, you're not losing anything because you didn't hit the annual limitation to begin with.
You and I have different definitions of an emergency fund. I would use my Roth as a last resort also.
Posted on 2/27/10 at 12:52 am to LSURussian
quote:
Raise your hand if you think Congress won't change the tax laws regarding the tax-free feature of Roth's before a twenty-something year old starts taking withdrawals from his account 40 years from now.
Fear of this exact scenario is the only 'risk' I see in converting my traditional IRA contributions to a Roth this year.
Posted on 2/28/10 at 4:30 pm to NOMT
I'm confused as to why no one on here seems to put any money into your Traditional. I thought one of the basics of tax planning was to accelerate deductions and defer income...
Posted on 2/28/10 at 4:46 pm to jmtigers
quote:
I wouldnt consider my retirement accounts emergency funds at all.
A Roth can be, yes.
Suppose you have $5000 at the end of the year. And it happens you plan to set aside $2000 for your rainy day fund. Do you:
1) Contribute $3K to the Roth and $2K to the rainy day fund?
2) Contribute $5K to the Roth so all earnings can be tax-free, and withdraw from it if you need to.
2 is the clear answer - earnings are tax-free.
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