If I understand things correctly, we (or if I perish early, she) will be able to withdraw the principle of the Roth contributions at any time after the first five years.Your understanding is incorrect. Roth contributions can be withdrawn at any time without any tax consequences. See IRS Pub 590 for details.So what would be the advantage, other than immediate liquitidy, of putting money into a non-deferred vehicle instead of a Roth?If you are putting money into a Roth, rather than putting it into a deductible Traditional IRA, you lose the deduction. If, in order to keep the money in the Roth liquid and safe from principal loss by keeping it in the same 'static' investment, you will lose the opportunity for the tax deferred growth in your Roth.AJ
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