28 y/o, feeling stressed after transferring $7k into 2024 Roth IRA contribution

[clbbig]

@addraornun Probably said elsewhere but I thought you can withdrawal your contributions in full without penalty before 59.5 just not the gains.

 

[flowerinthefield]

@victoryforever You can access that $7k contribution at anytime without penalty because it’s a Roth.

 

[tomato777]

@flowerinthefield Why is this not a higher comment? Roth IRA is almost an emergency fund in a way… you can access your contributions (not earnings from them) at any time with zero penalty because you have already paid taxes on them.

 

[nhquan85]

@flowerinthefield Is this also the case for a 401k Roth? or what if I transferref the 401k Roth to my Roth IRA? I have like 3k in my employer roth from this year (barely no gain), i am changing jobs now and will probably need to transfer out to my IRA, can i then take that out?

 

[flowerinthefield]

@nhquan85 No, there’s a 10% penalty if you withdraw contributions from a Roth 401k. You should really never take money out of that unless you’re absolutely desperate for it

 

[nhquan85]

@flowerinthefield Imma have to transfer it to another account when I change jobs by the end of this week, will it still incur the 10% penalty if I withdraw it then?

 

[flowerinthefield]

@nhquan85 If you rollover to another account, either a Roth IRA or Roth 401k, then there’s no penalty. There’s only a penalty if you withdraw from the Roth 401k as cash

 

[nhquan85]

@flowerinthefield I know theres no penalty to rollover, I am asking if theres a penalty to withdraw from my IRA after I rolled over from my Roth 401k into it (Ive had my IRA open for 2 years more or less)

 

[flowerinthefield]

@nhquan85 If the IRA is Roth then there is no penalty for withdrawing contributions

 

[vencelalas]

@victoryforever You worked really hard to build that savings up and by moving 7k of it to another place it might feel like you just took a chunk of it “away” but you’re Gucci. Everything your doing is smart. Congrats on being ahead of the game.

 

[victoryforever]

@vencelalas Thanks for the kind words. Definitely comforting to hear.

 

[recovering]

@vencelalas I think for people making this salary it really feels like you're losing the 7k after taking so long to save it. I have the same issue.

 

[vencelalas]

@recovering Totally agree. I think you just gotta remind yourself you’re not spending it on like leisure items and remind yourself of all the benefits of what moving that money to your Roth will provide- tax advantage, investment, accessibility, etc.

 

[glopez405]

@victoryforever You probably have over a year’s worth of expenses, even at $30k. I would move more of that into a brokerage account honestly.

 

[cmack]

@glopez405 They want to buy a property so they shouldn’t keep that money in a personal brokerage if they intend to use it within 5 years.

 

[chaseatlanta]

@cmack Depends on what you invest in, my wife and I are wanting to try and buy a house in the near future, and the down payment money we've saved up is in our brokerage account invested in a money market fund paying around 5.25%. it's just an alternative to an HYSA.

 

[cmack]

@chaseatlanta That’s a reasonable decision. I was assuming ETFs, MFs or individuals stocks. You’re doing it right and OP would be too if they did the same.

 

[dependingongrace]

@chaseatlanta Most wouldn’t consider a money market fund an investment it’s just another savings vehicle.

 

[chaseatlanta]

@dependingongrace That's true, I just access it through a brokerage.

 

[j1991]

@victoryforever If you die before 59.5 then you've given your beneficiary an amazing gift. They won't owe any taxes on their inheritance, unlike a traditional IRA.