epimedium wrote:I was wondering if anyone here has tapped their Roth IRA for an emergency use. As I understand it, you can withdraw contributions penalty free and you would complete IRS Form 8606 Part III. We have 6 months expenses in a taxable emergency fund but lack additional funds to contribute to a Roth IRA this year (we are maxing out both 403b and 457 to save $70000!). It seems like a no-brainer to contribute to the Roth from the emergency fund and allocate the contribution to a short term bond fund to preserve the Roth space for the future (and to earn pitiful interest tax free). There would still be plenty of additional funds remaining in an FDIC insured savings account. As for Roth vs 403b/457, we prioritize those since we are in a high tax state (NY) and plan to retire to a low/no tax state (NH). Thanks.
Not going into the off-topic sidebars re: 403b, 457, the $70,000, etc.
If the question is whether to move emergency funds to Roth IRA to ensure that you can contribute to the Roth for 2012, I would say go for it. If it is for 2013, I would suggest you wait until 04/2014 (or to the time when you have an emergency fund plus some left over to put into the Roth, whichever is earlier).