Skip to main content
No. of Recommendations: 0
One of the problems in dealing with a question like this is the number of varialbles; not the least of which are your goals as a couple, family obligations and the fun spending that makes deferred spending palatable.

You mentioned the "need" to spend some of this $20k and the general idea that deferred taxation or no taxation is a good idea. Most will agree. But you must understand that for every benefit there is a cost. You will be giving up flexibility to spend the prinicpal without penalty in the next five years, opening up separate, additional accounts, potentially greater fees, definitely more monthly statements, etc. Keep in mind that it's not hard to achieve tax efficiency and even with RP2 or RP4, the annual taxation should be painless out of other, current income for many years to come.

For younger wage earners who qualify the arithmetic is clearly on the side of Roth vs. regular IRA's. In your case, I would probably vote to keep my powder dry and use these funds as the basis for clearing debt, getting my "fun" money out of the way and fool on from there.
Print the post  


The Retirement Investing Board
This is the board for all discussions related to Investing for and during retirement. To keep the board relevant and Foolish to everyone, please avoid making any posts pertaining to political partisanship. Fool on and Retire on!
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.