I am hoping someone could check my math on this. If my income is about $45,000 with two children and I put $1000 into a pre-tax IRA my understanding is that it ups my EITC by about $210. That is essentially a 21% guaranteed return on investment. If I then withdrew that same amount paying the 10% early withdrawal penalty that still puts me at $110 gain (or about 11%). I figure the Premium Tax Credit and Savers Credit could skew this even more in my favor. Is that correct?

I understand that I would be paying taxes on the withdrawal in the year I take the funds out, but that should mostly be a wash because I will still be in the same tax bracket.

Also, I know that it is ideal to keep retirement funds in retirement accounts until retirement, but I am just exploring the worst case scenarios here to make sure I understand all the implications.

Sure seems like it's free money to max out all retirement accounts even if I think it might be possible that I will need the funds.

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