Timeline for How is money in a Roth IRA classified as either "earnings" or "contribution" (basis)?
Current License: CC BY-SA 3.0
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| Dec 18, 2013 at 17:02 | comment | added | JTP - Apologise to Monica♦ | @AdamJohns - no minimum time. My emergency Roth concept is not to treat your retirement account like an emergency fund, but rather, if one's 401(k) is enough, and they wouldn't otherwise use Roth, putting liquid emergency money into a Roth is a no risk option. It's not invested in stocks, but the same as any emergency money, money market, CDs, Tbills. Money market is liquid, same or next day withdrawal depending on broker. | |
| Dec 18, 2013 at 16:58 | comment | added | Adam Johns | also @JoeTaxpayer how liquid is a Roth? How quickly could I withdraw my contribution emergency amount and have it in my bank account in the case of an emergency? | |
| Dec 18, 2013 at 16:57 | comment | added | Adam Johns | @DilipSarwate I think he meant every year he deposited 1000 again. Not a one time 1000 deposit. I got confused reading that at first also. | |
| Dec 18, 2013 at 16:54 | comment | added | Dilip Sarwate | @MrChrister How does one deposit $1000 and lose $500 every year for 5 years? After 2 years, your account will be closed! But losing $50 per year for 5 years makes a lot more sense, and if you really have $750 left after losing $250 over 5 years and then have a gain of $5000, you cannot withdraw $5000 without penalty; only $1000 can be withdrawn without penalty. | |
| Dec 18, 2013 at 16:50 | comment | added | Adam Johns | @JoeTaxpayer is there a minimum amount of time to have a Roth open before even contributions can be pulled out? For example do you have to have your Roth account for 5 years before you can pull out contributions penalty free? Also what about the risk of associating an emergency fund with something that could decline in value like many of these funds in 2008? | |
| Dec 18, 2013 at 16:31 | comment | added | JTP - Apologise to Monica♦ | @MrChrister - Yes, 8606 doesn't care what happened in between. | |
| Dec 18, 2013 at 16:29 | history | edited | JTP - Apologise to Monica♦ | CC BY-SA 3.0 |
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| Dec 18, 2013 at 16:28 | comment | added | MrChrister | Could you explain what happens if you lose money in the roth? I deposit $1000 but I lose $500 every year for 5 years. Then a year of $5000 gain? Can I still withdraw $5K | |
| Dec 18, 2013 at 16:24 | comment | added | JTP - Apologise to Monica♦ | Yes - See edit above. Just to reinforce the point. | |
| Dec 18, 2013 at 16:23 | history | edited | JTP - Apologise to Monica♦ | CC BY-SA 3.0 |
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| Dec 18, 2013 at 16:20 | vote | accept | Adam Johns | ||
| Dec 18, 2013 at 16:20 | comment | added | Adam Johns | Oh I see I was thinking about this completely incorrectly. So every amount you personally put in (contribution) you can take out without penalty. Any money gained through interest (earnings) cannot be taken out without penalty before 59.5 years of age. | |
| Dec 18, 2013 at 16:15 | history | answered | JTP - Apologise to Monica♦ | CC BY-SA 3.0 |