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Started By
Message
How do you store non-emergency savings?
Posted on 2/5/13 at 12:06 pm
Posted on 2/5/13 at 12:06 pm
That is, potentially high dollar, sometimes unexpected, non-routine expenses that will nonetheless occur inevitably.
Car down payment.
Taking the family cross country
Need a new hot water heater
Buffer for moderate emergencies so you don't needlessly tap retirements
ETC
Checking?
Saving?
CD?
Taxable stock/bond account?
Roth?
Credit card? (Recursive option because you still need to budget for monthly payments up to a dollar amount (say a 5000 charge) and that money still gotta go somewhere waiting for a charge)
Car down payment.
Taking the family cross country
Need a new hot water heater
Buffer for moderate emergencies so you don't needlessly tap retirements
ETC
Checking?
Saving?
CD?
Taxable stock/bond account?
Roth?
Credit card? (Recursive option because you still need to budget for monthly payments up to a dollar amount (say a 5000 charge) and that money still gotta go somewhere waiting for a charge)
This post was edited on 2/5/13 at 12:10 pm
9
Posted on 2/5/13 at 12:08 pm to Siderophore
Have cash is savings or readily available, and get a home equity line of credit as a worst case option...
Posted on 2/5/13 at 12:09 pm to Siderophore
quote:
Roth?
Bad idea. Not liquid at all and you have to pay penalties to withdraw.
quote:
CD?
Not good depending on the length of it. Early withdraw from a CD comes with a penalty, so this is not very liquid.
quote:
Checking?
Typically no interest. Yes, some checking accounts come with interest, but not typical.
quote:
Saving?
I think the easiest thing is to keep it here. It is very liquid, yet still earns some interest, although very low. Better than none though.
Posted on 2/5/13 at 12:10 pm to PurpleAndGold86
quote:
Roth?
Bad idea. Not liquid at all and you have to pay penalties to withdraw.
No you don't, you only pay penalties on the earnings....
Posted on 2/5/13 at 12:14 pm to Lsut81
quote:
No you don't, you only pay penalties on the earnings....
Umm wrong. Very wrong.
You are typically penalized up to 10% for early withdraw on the amount of your withdrawal if you are under 59 1/2.
Posted on 2/5/13 at 12:16 pm to Siderophore
Roth is going to take at least some of the early run as you can pull 10k of earnings tax and penalty free for a house.
Not sure how to best manage the rest long term.
IDK, the opportunity cost of having ~5k sitting in an savings account waiting for something to happen would grate on me.
Not sure how to best manage the rest long term.
IDK, the opportunity cost of having ~5k sitting in an savings account waiting for something to happen would grate on me.
Posted on 2/5/13 at 12:16 pm to PurpleAndGold86
Not on a ROTH... you can take out your contributions penalty and tax free at anytime.
Posted on 2/5/13 at 12:17 pm to PurpleAndGold86
quote:
Umm wrong. Very wrong.
You are typically penalized up to 10% for early withdraw on the amount of your withdrawal if you are under 59 1/2.
Ummm you are wrong, very wrong
Posted on 2/5/13 at 12:19 pm to Lsut81
quote:
Roth IRA Withdrawal Rules
The whole point of an IRA (Roth or otherwise) is to save for retirement. Unfortunately, things don’t always go as planned, and you may find yourself needing to withdraw money from your Roth IRA before age 59½.
The most important thing to know is this: Contributions (that is, the money that you put into your Roth) can come out at any time, free of taxes and penalties.
Posted on 2/5/13 at 12:19 pm to jmtigers
quote:
Not on a ROTH... you can take out your contributions penalty and tax free at anytime.
You must know something special then.
quote:
Although you normally must hold the Roth account for at least five years and be at least 59 ½ before you can tap the earnings tax-free and penalty-free, there are exceptions, including death or disability of the account holder or to use up to $10,000 to purchase a first home for yourself or certain family members. In addition, you can avoid the 10% early withdrawal penalty, but will still incur income taxes, if you withdraw earnings early to pay higher-education costs for yourself or a family member.
quote:
Unless an exception applies, most distributions from a Roth IRA before the owner reaches age 59 1/2 will be subject to an "early withdrawal penalty" of 10% on the amount of the distribution. Be very careful NOT to confuse the early withdrawal penalty with the taxes imposed on a non-qualified distribution (discussed in Part III). A non-qualified distribution imposes an ordinary income tax on the distribution, but the early withdrawal penalty will be imposed in addition to that tax.
This post was edited on 2/5/13 at 12:20 pm
Posted on 2/5/13 at 12:19 pm to PurpleAndGold86
Umm sorry buddy, but you are wrong.
You can take your non converted contributions out of a Roth penalty and tax free at any time, no questions asked.
If I put in 5 grand in a Roth, and it grows to 8 grand, I can pull out 2 grand for braces for the kid with no tax/penalty.
Things only start getting muddled if you start to draw on earnings.
You can take your non converted contributions out of a Roth penalty and tax free at any time, no questions asked.
If I put in 5 grand in a Roth, and it grows to 8 grand, I can pull out 2 grand for braces for the kid with no tax/penalty.
Things only start getting muddled if you start to draw on earnings.
Posted on 2/5/13 at 12:21 pm to PurpleAndGold86
quote:
You must know something special then.
Yeah.
He knows how to read.
(Sorry for being harsh, I couldn't resist that set up.
) Your own quote expressly states EARNINGS.
You can withdraw your contributions easily.
No you can't tap the growth but you can take the principal
This post was edited on 2/5/13 at 12:28 pm
Posted on 2/5/13 at 12:22 pm to Siderophore
Actually purple and gold is right.
Only certain exceptions let you withdraw from ROTH.
Death being one, 1st time home buyer of up to 10,000 is another, and i forgot the third.
Only certain exceptions let you withdraw from ROTH.
Death being one, 1st time home buyer of up to 10,000 is another, and i forgot the third.
Posted on 2/5/13 at 12:23 pm to LSUTigers00884
quote:
Actually purple and gold is right.
Only certain exceptions let you withdraw from ROTH.
Death being one, 1st time home buyer of up to 10,000 is another, and i forgot the third.
Posted on 2/5/13 at 12:23 pm to Siderophore
quote:
Yeah.
He knows how to read.
(Sorry for being harsh, I couldn't resist that set up. )
Your own quote expressly states EARNINGS.
You can withdraw your contributions easily.
No you can't tap the growth but you can take the principle
Did you read the second quote? I guess you didn't.
Here is a quote directly from USAA if I click on the link that says withdraw from my Roth IRA.
quote:
Because you are less than 59½ years of age, your withdrawal may be subject to taxes and penalties. Please consider alternatives to withdrawing from your IRA
Posted on 2/5/13 at 12:24 pm to LSUTigers00884
Posted on 2/5/13 at 12:25 pm to PurpleAndGold86
quote:
Please consider alternatives to withdrawing from your IRA
An IRA is not a ROTH IRA
For fricks sake
quote:
This is a follow-up to my recent post Roth IRA Contribution vs. Emergency Fund Savings, where I suggested that people should just fund their Roth IRAs first over an Emergency Fund. Basically, this is because anyone can withdraw their Roth IRA contributions at any time, without penalty. (Not earnings, just contributions.) Put in $4,000, and you can take out $4,000 later – be it one day later, one week later, or one decade later. But some concerns were raised about the validity of that assumption, so I wanted to iron that out here using the IRA Bible, aka IRS Publication 590.
This post was edited on 2/5/13 at 12:26 pm
Posted on 2/5/13 at 12:26 pm to PurpleAndGold86
Posted on 2/5/13 at 12:27 pm to PurpleAndGold86
quote:
Because you are less than 59½ years of age, your withdrawal may be subject to taxes and penalties. Please consider alternatives to withdrawing from your IRA
Are there circumstances that would incur taxes and penalties?
Of course.
Pulling earnings for non qualified distros will do it.
Pulling conversions prior to seasoning period closure will.
Pulling contributions won't.
If all circumstances resulted in a penalty, the language in your would would have been "will."
Posted on 2/5/13 at 12:29 pm to C
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