You can contribute up to $7,500, then withdraw your contributions penalty-free whenever you want. Is there any reason not to max it out yearly given you can afford to?
So a Roth IRA can be used line a mini bank account that doubles as an investment account?
byu/ThisIsATest7777 inpersonalfinance
Posted by ThisIsATest7777
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Must be open for five years. Must be over 59 1/2 to withdraw. Once retired cannot put any more in it since it must come from earned income.
You can do that, as long as you don’t mind the extra hassle (no ACH) and bookkeeping. Mistakes can be expensive, costing you additional taxes and penalties. If you are using it as an investment account, tax loss harvesting is not available as a strategy.
The biggest risk is a market downturn where your contributions are now worth half of what you put in
Yes — if you are building an emergency fund and cannot afford to invest for retirement, it makes a lot of sense to treat the Roth IRA as your emergency fund.
But you shouldn’t invest the money in volatile assets like stocks until your emergency fund is fully funded.
You can withdraw contributions at any time, but you can’t “refill,” so to speak, so when you’re only limited to ~$7,500/year, you lose a lot of the benefits of compound interest.