Cashing in Roth

[maat55]

What are good reasons to cash in a Roth and when not?

It's hard to think that there would ever be a good reason to cash in a Roth, but what about if you needed money for a down payment on a good realestate investment. I'd like to see some ideas.

[safari]

It is never a good idea because once you cash in that money, you won't be able to put them back in. It's better to borrow money from your 401(k) if you really need it because you will repay that loan to yourself. The only time cashing in your Roth is justified is when you have a true emergency and can't pay your bills because you lost your job or had a medical emergency. Using that money as a down payment is not an emergency.

[disneysteve]

The only time cashing in your Roth is justified is when you have a true emergency

I agree. There is no good reason short of a catastrophe to raid your retirement accounts. If you want to buy a home, save up a down payment.

[LivingAlmostLarge]

Um, unemployed for 3-4+ years and have drained all taxable savings. Nothing else to live on?

[Broken Arrow]

Interesting....

In my case, my 401k is maxed (and again, my employer has no match limit). Sooo, with a Roth, I can go either way with this, because I currently don't own a house but would like to some day. So, if I was going to build a house fund anyway, it makes more sense to me to use a Roth rather than a taxable account....

Again, I think this is a very specific case, and I do not disagree at all with the convention to never use your Roth IRA for anything else.... But then, as the saying goes, "Every rule has an exception", especially with finances?

[maat55]

Say a business owner has been renting a place to do business at a very low rent and the building is being put up sale. The business owners options are to leave and pay higher rent or buy the building and rent out additional space at the cost of the loan payment, but he needs down payment money to do the deal. Is cashing in an roth a good idea for this senario?

[texastek76]

Um, unemployed for 3-4+ years and have drained all taxable savings. Nothing else to live on?

Is this even possible anymore for someone really trying?

[disneysteve]

Say a business owner has been renting a place to do business at a very low rent and the building is being put up sale. The business owners options are to leave and pay higher rent or buy the building and rent out additional space at the cost of the loan payment, but he needs down payment money to do the deal. Is cashing in an roth a good idea for this senario?

I guess you need to run the numbers. Figure out how much you will lose in penalties by cashing out the Roth. If you are only withdrawing contributions, you likely won't lose anything. In that case, look at the overall retirement picture. If you have adequate retirement assets without the Roth (like a big 401k account or a solid pension), then perhaps you can be okay without the Roth assets. Personally, though, my Roth IS my retirement account so I can't imagine touching that for anything but retirement.

[LivingAlmostLarge]

Apparently it is. I don't know anyone but if you read some blogs they were unemployed for 3+ years.

[Gruntina]

Apparently it is. I don't know anyone but if you read some blogs they were unemployed for 3+ years.

In the Bay Area there are several Deaf people with professional degree or experiences that were laid off has taken them a few years before finding another job. People who never experience working with Deaf people are reluctant to hire them due to ignorance. I understand this is classifying deaf unemployment but I am sure this is beyond that. People are people so it can happen and others are well fortuned to not have this problem.

[anonymous_saver]

Say a business owner has been renting a place to do business at a very low rent and the building is being put up sale. The business owners options are to leave and pay higher rent or buy the building and rent out additional space at the cost of the loan payment, but he needs down payment money to do the deal. Is cashing in an roth a good idea for this senario?

I would still say "No."

You still need retirement money, just because they are a business owner, doesn't mean they would be good/sufficient landlord, etc.

[autoxer]

What are good reasons to cash in a Roth and when not?

It's hard to think that there would ever be a good reason to cash in a Roth...

The best reason to cash it in... Because you are retired and it is part of your retirement spending plan.

[disneysteve]

The best reason to cash it in... Because you are retired and it is part of your retirement spending plan.

Love it. That's the best answer!

[maat55]

I guess you need to run the numbers. Figure out how much you will lose in penalties by cashing out the Roth. If you are only withdrawing contributions, you likely won't lose anything. In that case, look at the overall retirement picture. If you have adequate retirement assets without the Roth (like a big 401k account or a solid pension), then perhaps you can be okay without the Roth assets. Personally, though, my Roth IS my retirement account so I can't imagine touching that for anything but retirement.

I look at it as trading one investment for another. Being that it is only down payment money, it shouldn't break the bank. I agree, that it should be a last option.

[moneybags]

My kids have money in their Roths. If they need it for college, they may use it. Hopefully college will be funded from other sources, but the Roths are a back up. I prefer they leave it in, but who knows what they'll think as a grown up.

I would think taking money out as an 18 year old, they still have time to fund their retirement. (I also think it's never too early to save for retirement, which is why this money is there.)