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Roth Ira As Part Of Emergency Fund

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Does anyone use their Roth IRA as part of their emergency fund? We (my wife and I) both fully fund our 403b each year. Our guaranteed option in our through Roth through WEA Trust is 5% for 2010. Compared to the 1% in the Vanguard Money Market, we think we should contribute a little more to the Roth.

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Does anyone use their Roth IRA as part of their emergency fund? We (my wife and I) both fully fund our 403b each year. Our guaranteed option in our through Roth through WEA Trust is 5% for 2010. Compared to the 1% in the Vanguard Money Market, we think we should contribute a little more to the Roth.

 

 

I guess you could do that since the money that you invested in a Roth IRA can be withdrawn at any time. If you withdraw the earning from it though, their could be a penalty. I do think of it as emergency fund but hopefully, I do not have to use it as such.

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bk10,

Never had an official emergency fund. I figured that if I abosultely needed emergency money NOW, I would borrow from my credit card. For years I have had up to $20,000 limit.

 

If you want to maximize your roth ira for the 5% yield, well, thats a no brainer. I wonder how in the world can any vendor get that high of a yield? For me, and its just me, I think its a deal that is "too good to be true". But thats just me.

 

Happy new year,

Steve

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Hey Steve - You are absolutely right! Was that a "Been there, done that? (ha-ha)

 

I would normally keep a higher balance in our Vanguard Money Market but have decided to pump the Roth in the fixed account - At least until the rate comes back on the Money Market. We have not maxed the Roth for 2009 like we did for 2008 and previous. Seems kind of foolish to sit at the 1% in the Money Market.

 

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Does anyone use their Roth IRA as part of their emergency fund? We (my wife and I) both fully fund our 403b each year. Our guaranteed option in our through Roth through WEA Trust is 5% for 2010. Compared to the 1% in the Vanguard Money Market, we think we should contribute a little more to the Roth.

 

 

You can do it but you'll pay a 10% penalty on earnings and owe income taxes. How long would it take for you to receive the money from WEA Trust? I have my emergency fund parked in a money market at a credit union because I want liquidity and convenience in the event of an emergency - I don't want to have to fill out paperwork and wait for it to be processed/approved. Perhaps WEA Trust can take care of such a request in a hurry without hassle but I don't know that I would count on it.

 

Something else to consider is the size of your emergency fund. If it is larger than you think you might need, then definitely think about investing the excess amount.

 

 

 

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