Comments on: Should I Put My Emergency Fund into a Roth IRA? http://cooltobefrugal.com/should-i-put-my-emergency-fund-into-a-roth-ira/ Learn how to live on one income. Discover how to effectively use coupons, download free budget templates, and learn how to make extra money online. Tue, 31 Jan 2012 19:23:05 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Is It Worth It to Have an Emergency Fund, or Should I Pay off My Mortgage Instead? | Invest It Wisely http://cooltobefrugal.com/should-i-put-my-emergency-fund-into-a-roth-ira/comment-page-1/#comment-1096 Is It Worth It to Have an Emergency Fund, or Should I Pay off My Mortgage Instead? | Invest It Wisely Wed, 08 Sep 2010 16:36:12 +0000 http://cooltobefrugal.com/?p=567#comment-1096 [...] Cool to be Frugal: Should I Put My Emergency Fund into a Roth IRA? [...] [...] Cool to be Frugal: Should I Put My Emergency Fund into a Roth IRA? [...]

]]> By: Your Emergency Fund-Let’s Fine Tune That Baby!!! | The Millionaire Nurse Blog http://cooltobefrugal.com/should-i-put-my-emergency-fund-into-a-roth-ira/comment-page-1/#comment-339 Your Emergency Fund-Let’s Fine Tune That Baby!!! | The Millionaire Nurse Blog Thu, 29 Apr 2010 10:24:07 +0000 http://cooltobefrugal.com/?p=567#comment-339 [...] Cool to be Frugal, has this controversial subject, putting part of your emergency fund in a Roth IRA. [...] [...] Cool to be Frugal, has this controversial subject, putting part of your emergency fund in a Roth IRA. [...]

]]> By: The Yakezie Challenge Carnival #8 – Tax Day Edition! | MyMoneyMinute.com http://cooltobefrugal.com/should-i-put-my-emergency-fund-into-a-roth-ira/comment-page-1/#comment-288 The Yakezie Challenge Carnival #8 – Tax Day Edition! | MyMoneyMinute.com Mon, 19 Apr 2010 08:50:47 +0000 http://cooltobefrugal.com/?p=567#comment-288 [...] Cool To Be Frugal — Should I Put My Emergency Fund Into A Roth IRA? [...] [...] Cool To Be Frugal — Should I Put My Emergency Fund Into A Roth IRA? [...]

]]> By: Yakezie Challenge Carnival #4 - The Growth Edition « Eliminate The Muda! http://cooltobefrugal.com/should-i-put-my-emergency-fund-into-a-roth-ira/comment-page-1/#comment-116 Yakezie Challenge Carnival #4 - The Growth Edition « Eliminate The Muda! Sun, 21 Mar 2010 12:17:28 +0000 http://cooltobefrugal.com/?p=567#comment-116 [...] Cool to be Frugal asks Should I Put My Emergency Fund into a Roth IRA? [...] [...] Cool to be Frugal asks Should I Put My Emergency Fund into a Roth IRA? [...]

]]> By: Mrs. Frugal http://cooltobefrugal.com/should-i-put-my-emergency-fund-into-a-roth-ira/comment-page-1/#comment-91 Mrs. Frugal Mon, 15 Mar 2010 13:35:11 +0000 http://cooltobefrugal.com/?p=567#comment-91 Hi Bab, thanks for your comment! Just to clarify, I am referring to "regular contributions" that are after-tax. Roth IRA rules state that: 1.) Distributions come from regular participant contributions until these are used up ~and~ 2.) a distribution of regular contributions is always tax and penalty free, regardless of when the distribution occurs. There is no waiting period. So, if I take $5,000 from my savings account and put it in a Roth IRA, I can withdraw that $5,000 at any time without penalty. It is when I try to withdraw earnings that I'll face a penalty and taxes. The point of the article is that I can take funds I have earmarked in a savings account as emergency funds and place them into a ROTH where they can potentially grow tax-free and still have the same access to those original funds (not the earnings) without penalty. More information on this can be found at http://www.investopedia.com/articles/retirement/03/030403.asp. Thanks for helping me clarify this as it is very important to understand. Hi Bab, thanks for your comment! Just to clarify, I am referring to “regular contributions” that are after-tax. Roth IRA rules state that:

1.) Distributions come from regular participant contributions until these are used up
~and~
2.) a distribution of regular contributions is always tax and penalty free, regardless of when the distribution occurs. There is no waiting period.

So, if I take $5,000 from my savings account and put it in a Roth IRA, I can withdraw that $5,000 at any time without penalty. It is when I try to withdraw earnings that I’ll face a penalty and taxes.

The point of the article is that I can take funds I have earmarked in a savings account as emergency funds and place them into a ROTH where they can potentially grow tax-free and still have the same access to those original funds (not the earnings) without penalty.

More information on this can be found at http://www.investopedia.com/articles/retirement/03/030403.asp.

Thanks for helping me clarify this as it is very important to understand.

]]> By: Bab http://cooltobefrugal.com/should-i-put-my-emergency-fund-into-a-roth-ira/comment-page-1/#comment-90 Bab Sun, 14 Mar 2010 20:26:33 +0000 http://cooltobefrugal.com/?p=567#comment-90 Hi! I applaud your efforts....but, a ROTH IRA is no place for your emergency funds. According to TRowe Price Withdrawals have some restrictions, "Tax-Free Contributions may be withdrawn at any time without taxes or penalties; earnings may be withdrawn tax-free and penalty free once you reach age 59½ and the account has been open for at least five years. Taxable Earnings may be subject to taxes and penalties if distributed before age 59½ and before the account is five years old. " Don't worry about the low interest rate environment now. Interest rates will likely rise sooner rather than later! You are better off with low rates now than paying a penalty and taxes withdrawing money early from a ROTH. Hi! I applaud your efforts….but, a ROTH IRA is no place for your emergency funds. According to TRowe Price
Withdrawals have some restrictions,
“Tax-Free Contributions may be withdrawn at any time without taxes or penalties; earnings may be withdrawn tax-free and penalty free once you reach age 59½ and the account has been open for at least five years.
Taxable Earnings may be subject to taxes and penalties if distributed before age 59½ and before the account is five years old. ”
Don’t worry about the low interest rate environment now. Interest rates will likely rise sooner rather than later! You are better off with low rates now than paying a penalty and taxes withdrawing money early from a ROTH.

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