Using Roth IRA as Emergency Fund? - Page 3

starshard0 · 02-19-2009, 06:13 PM

Quote:

Originally Posted by singleguymoney

I keep saying I am going to open a Roth but I haven't gotten around to it. I have always been a little squeamish of the market and the past performance over the last few years hasn't helped things.

Same here, I think one of major deterrents for me is the minimum investment.

kvee · 02-19-2009, 07:02 PM

Quote:

Originally Posted by sr82

Do you guys have any recommendations as far as who to open a Roth IRA account with? Any suggestions as far as fees, customer service goes?

I have 2 Roth accounts (for myself and my wife) at Scottrade. They are a discount broker similar to TD Ameritrade. No cost to open an account, and $7 trades. They have an office in my town, too, which I used to open the accounts. Its nice to deal with a real person on occasion.

nkthen · 02-22-2009, 05:49 PM

If you are the type of person who wants to have tax-free withdrawals after some time, then the choice of Roth IRA could be good.

KevinW · 02-22-2009, 07:23 PM

Quote:

Originally Posted by sr82

Thanks for the info!

Do you guys have any recommendations as far as who to open a Roth IRA account with? Any suggestions as far as fees, customer service goes?

Thanks!

One word: Vanguard.

mike313t · 02-22-2009, 09:26 PM

Depending on your age, generally investing for your retirement is long term. The younger you are the riskier your investments. As you get closer to your retirement, you start moving more towards money markets and bonds. So if you are at a younger age, it is not a good idea to use your IRA as an emergency fund due to the possiblility that you may have to sell your shares low. Eventhough it is always an option in a true emergency, a savings/money market account is a must.

HumbledMom · 02-23-2009, 11:56 AM

I agree with the posting about using a savings account as an emergency account. You want to try to have 6 months living expenses in a savings account if you can.

If you are employed, there is another way to access cash immediately (depending on how much you need) and start ANY type of home business (dog walking, photography, babysitting, jewelry making, selling smoothies at sporting events, etc.) so that you can legally and morally convert thousands of personal expenses you are already making and turn them into legitimate tax deductions. You may be able to deduct part of your home/auto/food/entertainment/health supplements/alternative medicine/fitness club, etc.

Change your W-4 form to increase your # exemptions (you can have up to 10 without triggering any type of audit concern) and your employer will withhold less for federal and state taxes. We did this 8 years ago (we have a family of 5 and we take 10 exemptions ...we just told the employer we have additional tax deductions and they never gave us any hassles..it's our money anyway!) --- so we get more money from our pay check --- AND we still get over $5,000 in tax refunds after applying all the deductions from the home business. And we've actually made some money in the business (not enough to quit my husband's day job...but's it's a great back up plan just in case he ever gets the ax).

There are free audios and other reports that talk more about it here. The guy is a CPA and a former IRS Tax Attorney and he's been around for over a decade -- apparently even IRS agents recommend him because he knows his stuff.

www.taxdeductionstrategies.com

Something to check out anyway.

Everything is cheaper if you can get a tax deduction on it.

Philip Brewer · 02-23-2009, 01:04 PM

Whether this is a good idea depends on the kind of person you are.

If you're the sort of person who is more likely to make the Roth IRA contribution if you tell yourself that it's part of your emergency fund, then by all means tell yourself that.

On the other hand, if you're the sort of person who calls it an "emergency" any old time the budget gets a bit pinched--and will start taking money out of a Roth rather than cutting expenses to the bone--then you'd be doing yourself a disservice to think of your Roth that way.

The feature that lets you take your original contributions out of a Roth without penalty is great for real emergencies. But the win of a Roth is that your money can grow for decades. If you take it out, you lose that.

02-22-2009, 05:49 PM	#23
nkthen Junior Member Join Date: Dec 2008 Posts: 24 Thanks: 0 Thanked 0 Times in 0 Posts Reputation: (10)	If you are the type of person who wants to have tax-free withdrawals after some time, then the choice of Roth IRA could be good. __________________ Personal Finance Tips \| Chapter 7 Exemptions \| Bad Credit Lender \| Bank Foreclosure List

02-22-2009, 09:26 PM	#25
mike313t Junior Member Join Date: Oct 2008 Posts: 17 Thanks: 0 Thanked 0 Times in 0 Posts Reputation: (10)	Depending on your age, generally investing for your retirement is long term. The younger you are the riskier your investments. As you get closer to your retirement, you start moving more towards money markets and bonds. So if you are at a younger age, it is not a good idea to use your IRA as an emergency fund due to the possiblility that you may have to sell your shares low. Eventhough it is always an option in a true emergency, a savings/money market account is a must. __________________ http://www.IRAEducationalMaterial.com http://www.IRAEducationalMaterial.com/RothIRA.aspx

02-23-2009, 11:56 AM	#26
HumbledMom Junior Member Join Date: Feb 2009 Posts: 3 Thanks: 0 Thanked 0 Times in 0 Posts Reputation: (10)	another option for Emergency Fund... I agree with the posting about using a savings account as an emergency account. You want to try to have 6 months living expenses in a savings account if you can. If you are employed, there is another way to access cash immediately (depending on how much you need) and start ANY type of home business (dog walking, photography, babysitting, jewelry making, selling smoothies at sporting events, etc.) so that you can legally and morally convert thousands of personal expenses you are already making and turn them into legitimate tax deductions. You may be able to deduct part of your home/auto/food/entertainment/health supplements/alternative medicine/fitness club, etc. Change your W-4 form to increase your # exemptions (you can have up to 10 without triggering any type of audit concern) and your employer will withhold less for federal and state taxes. We did this 8 years ago (we have a family of 5 and we take 10 exemptions ...we just told the employer we have additional tax deductions and they never gave us any hassles..it's our money anyway!) --- so we get more money from our pay check --- AND we still get over $5,000 in tax refunds after applying all the deductions from the home business. And we've actually made some money in the business (not enough to quit my husband's day job...but's it's a great back up plan just in case he ever gets the ax). There are free audios and other reports that talk more about it here. The guy is a CPA and a former IRS Tax Attorney and he's been around for over a decade -- apparently even IRS agents recommend him because he knows his stuff. www.taxdeductionstrategies.com Something to check out anyway. Everything is cheaper if you can get a tax deduction on it.

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02-23-2009, 01:04 PM	#27
Philip Brewer Wise Bread Blogger Join Date: Jul 2007 Location: Champaign, IL Posts: 184 Thanks: 1 Thanked 6 Times in 4 Posts Reputation: (27)	Whether this is a good idea depends on the kind of person you are. If you're the sort of person who is more likely to make the Roth IRA contribution if you tell yourself that it's part of your emergency fund, then by all means tell yourself that. On the other hand, if you're the sort of person who calls it an "emergency" any old time the budget gets a bit pinched--and will start taking money out of a Roth rather than cutting expenses to the bone--then you'd be doing yourself a disservice to think of your Roth that way. The feature that lets you take your original contributions out of a Roth without penalty is great for real emergencies. But the win of a Roth is that your money can grow for decades. If you take it out, you lose that.