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Is there a reason I shouldn't contribute my cash-cushion/emergency fund to my 5 year old ROTH IRA (invested in conservative cash-with-interest type fund of course)?

It looks like I'm able to withdraw contributed amounts without tax or penalty, since the account has been in existence for 5 years.

My money will be building tax-free earnings, and I'll have ready access to the contribution amount if needed. Am I missing something here?
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MeanOldMomLady writes (in part):

My money will be building tax-free earnings, and I'll have ready access to the contribution amount if needed. Am I missing something here?

I reply:

Opportunity cost. There is an annual limit on the amount of money one may contribute to a Roth. If you dump the money in and then take it out again, you don't get another opportunity to contribute it. --Bob
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Opportunity cost. There is an annual limit on the amount of money one may contribute to a Roth. If you dump the money in and then take it out again, you don't get another opportunity to contribute it.

And if you don't make the Roth contribution - keeping the funds fully liquid - and find you don't need them, you've missed the opportunity to make the contribution.

--Peter <== aka Devil's advocate
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Sure enough -- Thanks.
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(invested in conservative cash-with-interest type fund of course)?

I think that is the key point for others who might consider this strategy. The more that the investment flucuates, the greater the risk of the balance being low when you need to take the money out.
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. The more that the investment flucuates, the greater the risk of the balance being low when you need to take the money out.

Depends how much of the account is invested in fixed income. If part of the account is being used as an emergency fund, keeping some of it in a low yielding, but stable investment is reasonable.

Debra
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exactly
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