Roth IRA withdraws are tax and penalty free under the age of 59.5 as long as only the contributions are withdrawn. If earnings are withdrawn, the earnings are penalized 10%. First time home-owners can in addition withdraw up to 10,000 of earnings without penalty.
I understand that the contributions and earnings are subject to market volatility. I intend to place a mortgage down payment on an FHA property in the next 2-3 years. Am I crazy to use a Roth IRA for this vs a HYSA?
I want to capitalize on the usage of a Roth IRA now while I am young and my tax bracket is lower then it will be in the next few years. I intend to only withdraw the contributions and not a penny more, the earnings will stay in the Roth IRA and I will continue contributing to it long as I am able/meet the guidelines. I want to take advantage of this opportunity.
My issue is, it's either I contribute into a HYSA OR the Roth IRA for the down payment, I can not do both as I do not have the cash flow--I will only contribute enough into an HYSA for emergency funds if I use the Roth IRA as an investment vehicle towards a mortgage. I am already maximizing my employer match for my 401k.
I understand that if the market crashes, my Roth IRA can go to nothing and drastically slow me down in context to my mortgage goal, but at the same time I see a massive benefit to having one.
Submitted May 14, 2019 at 09:38PM by skramboney http://bit.ly/2WN80GQ
