Roth IRA question

[RoadToRiches]

I don't have Roth IRA. I only have 401k from work.

I am currently working my debt payoff plan but trying to learn as much as I can about using my money in a smart way. I have to say, I learned a lot from here already.

Question I have is about Roth IRAs. I understand that this is after tax contributions, so I am already being taxed for that. With that said, can I just take out money out of Roth IRA anytime I want to? Just like I would have let's say scottrade account with stocks?

Could I essentially park my long term EF in Roth IRA? Let's say if my goal is to have 6 months of expenses in EF, I could do say, 3 months in savings account that I could access quickly and then 3 months worth in Roth IRA and I could take that Roth IRA money out anytime I want to?

[jk70]

I believe you can only take the contributions out, not the earnings. So if you put 5,000 in this year and in December it was up to 10,000 but you had an emergency that costs you 8,000; you can only withdraw the 5,000. You could withdraw the earnings but you would penalized

[garion2003]

that's my understanding too. Of course, we know we'd NEVER want to withdraw those funds, but it's good to know they are there in case of catastrophe.

[Deleted]

Our Roth IRA's has always served as extra EF. Last year when we moved we took out 1K to cover expenses and later replaced it.

As long as you withdraw up to the amount you contributed you face no penalties. You don't want to use it but it's good to know it's there in case you need it.

[azphx1972]

I think you can only take out your contributions penalty free after 5 years since the first contribution into your ROTH IRA was made. I could be wrong. Someone more knowledgeable than me please provide input.

[Deleted]

Nope, from day one you can take out your contributions penalty free.

[reader79]

When/if you take the money out, you can't really 'replace' it as if you were paying back a 401K loan. Your max contributions for the year remain at $5K.