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This one gets bandied around the net a lot, and I've been trying to pin down the answer:

If you put money in a ROTH IRA (called a "Contribution"), you can take that money back out with zero penalty.

Wonderful, yes? Use it as your emergency fund.

QUESTION: If I withdraw money, can I put it back in????

Let's say I can contribute up to $5000/year, and I put $5000 in by March. Now in April I need $2000, so I withdraw that. Am I done for the year--with a total contribution of $3000--or can I put that $2000 back in?

Loads of blogs, forums, and the like say, yes, you're done. If you pull the money out, you can't "put it back," it's too late. So I went digging. Here is what I found:

IRS Publication 509 Chapter 2:

**Withdrawals of contributions by due date.** If you withdraw contributions (including any net earnings on the contributions) by the due date of your return for the year in which you made the contribution, the contributions are treated as if you never made them. If you have an extension of time to file your return, you can withdraw the contributions and earnings by the extended due date. The withdrawal of contributions is tax free, but you must include the earnings on the contributions in income for the year in which you made the contributions.

Does "Treated as if you never made them" thus mean that I can go ahead and stick money in my ROTH IRA willy-nilly and pull it back out if I want it? As long as, net, I put in $5000, I'm fine, right?

And what the heck is this earnings thing? They actually recommend that I can safely and freely withdraw the earnings on those contributions, without paying a penalty, just income on the earnings? That's crazy. Do you WANT a tax nightmare?

Also they give you hacks: File for an extension, finish repaying your loan off your ROTH IRA, then file your taxes late. Just to get that last few dollars back in and max out your IRA.

Sou desu ka?
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