(To be clear, IRA accounts are just wrappers, and can contain a large variety of investments. I'm restricting myself to the usual setup of investment in the stock market.)
- Once you remove money, you can't put it back; the money still counts for the yearly deposit limit.
- There can be issues with time needed to move money from the IRA account to a form you can directly spend.
- Stocks can go down.
So, let's say you have $5000 in savings, as an emergency fund. Of the top of my head, putting some of it into a Roth IRA could backfire in the following ways:
- You have an emergency, and it takes you a few days to move the money to your checking account to spend it, when you need the money now.
- You have an emergency, and the stock market is not in great shape that day. You withdraw your money anyway because you don't have a choice, but you still lose a bunch of money.
The basic principle here is that the stock market is not a good place for storing your emergency cash, which needs to be secured against loss and immediately accessible. Once you're happy with your level of emergency cash, however, tax-advantaged investment accounts are a reasonable next step.