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Uses for Your Roth IRA Go Beyond Retirement

Uses for your Roth IRA? Well, the primary use is for retirement, of course. But there are other life events when having a Roth IRA can come to the rescue.

The Swiss Army Knife Retirement Account?

The financial versatility of the Roth IRA comes from its tax treatment. The money you invest in a Roth comes from after-tax dollars (federal withholding taxes are already paid). So, if you withdraw only the amount of your contributions and none of the earnings, you won’t pay income tax on the withdrawal. Nor will you pay an early withdrawal penalty.

NOTE: This account is funding your retirement. There are real drawbacks from taking money out before you retire. For one thing, early withdrawal means you’re missing out on future earnings. Also, you can’t pay the money back into your account. That said, these are some uses for your IRA Roth if a sudden need or emergency arises.

To Pay for an Emergency (Of Course)

If disaster strikes, you can using your Roth as emergency savings. But you should only consider this if you don’t have sufficient funds in your regular savings account. Or if you can’t/don’t want to take out a loan.

NOTE: If you’ve converted a regular IRA to a Roth IRA, those funds are off-limits until five years have passed.

First-Time Home Purchase

You can take up to $10,000 from a regular IRA account without penalty to finance your first home purchase. But with a Roth IRA, you can take out more – the amount of your contributions, PLUS $10,000. So, if you’ve contributed $20,000, you can withdraw that along with another $10,000. That makes a total of $30,000 to use for financing your home purchase. But you’ll want to make sure the cost of sacrificing future earnings for your Roth IRA will likely be less than the interest you’d pay for a mortgage.

Paying for School

There are several government options to save for college (see the link below) without having to pay tax. But if you need to supplement those savings, withdrawing contributions from a Roth IRA could be the answer.

Flexible Uses for Your Roth IRA

Saving for retirement is vital, and a Roth IRA is a great vehicle for it. But when other big life changes come up, your Roth can be the backup you need.


HUD has a page of resources for first-time homebuyers to help you afford that dream house.

Check out our blog post on education savings plans.

Lastly, you can learn more about our services here!