One of the basic rules of family finance is to set up an emergency fund, basically to keep from overusing credit cards. Setting up and maintaining an emergency savings account is like filling up a leaky bucket. For Capital Region families, it's never going to be full, and if you don't pay close attention it can be emptied quickly.
In a pinch, a Roth IRA could provide some quick cash. That's because Roth contributions can mostly can be withdrawn penalty-free at any time.
Experts don't encourage that because it really should be a vehicle that's earmarked for retirement. The reality is that a Roth does offer some flexibility.
To take out more than just the contributions, investors must be at least 59 1/2 years old and the account must have been opened for five years. But there are some qualified withdrawals if you don't meet the age or holding period requirement.
One of them is, for instance, a first-time home purchase up to $10,000. Another is post-secondary education expenses.
There are some other circumstances as well, according to the IRS:
- Unreimbursed medical expenses that exceed 10 per cent of adjusted gross income
- Back taxes
Dave Balog teaches financial essentials for families. Visit his Web site or call 952-1257.