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ROTH IRA For Temporary Emergency Fund? Your opinion?
April 15th is quickly approaching. We are scheduled to max out, or close to max out, our Roth IRA this year (2012).
Last year we contributed nothing (2011).
We have a fair amount of cash in the bank and can max out last years contribution ($10k)
We need a new roof this summer. We aren't sure exactly how much it's going to be, but we *think* we'll have enough saved up (approximately $7-$9k) for the expense when the time comes.
My understanding is that we can contribute to a ROTH IRA for last year ($5k per person, $10k total) and can still pull out the PRINCIPLE without any taxes or penalties of any kind, except that we can NOT put the funds BACK INTO the Roth IRA for the year we took money out.?
So, because we aren't 100% sure that we'll have saved enough for the new roof in time, we were going to just hold the funds in the bank, but if we can drop it into a ROTH IRA and be able to take it out if needed (I hope we can just leave it there) I see no reason not to contribute to 2011's Roth IRA.
Is this right? Does anyone have any experience withdrawing just the principle of a Roth IRA?
To sum it up:
Emergency fund currently in cash.
Move fund into 2011's Roth IRA.
If funds are needed before rebuilding emergency fund, can we pull the principle out of ROTH without penalty.
Last year we contributed nothing (2011).
We have a fair amount of cash in the bank and can max out last years contribution ($10k)
We need a new roof this summer. We aren't sure exactly how much it's going to be, but we *think* we'll have enough saved up (approximately $7-$9k) for the expense when the time comes.
My understanding is that we can contribute to a ROTH IRA for last year ($5k per person, $10k total) and can still pull out the PRINCIPLE without any taxes or penalties of any kind, except that we can NOT put the funds BACK INTO the Roth IRA for the year we took money out.?
So, because we aren't 100% sure that we'll have saved enough for the new roof in time, we were going to just hold the funds in the bank, but if we can drop it into a ROTH IRA and be able to take it out if needed (I hope we can just leave it there) I see no reason not to contribute to 2011's Roth IRA.
Is this right? Does anyone have any experience withdrawing just the principle of a Roth IRA?
To sum it up:
Emergency fund currently in cash.
Move fund into 2011's Roth IRA.
If funds are needed before rebuilding emergency fund, can we pull the principle out of ROTH without penalty.
