Is it okay to use part of my emergency fund to finish funding my 2012 Roth IRA? It would only take about $1,500, and I think I could replenish my savings in two or three months.
—Laura in St. Louis, Mo.
Dave Says: I wouldn’t do that if I were you. It’s funny how Murphy always knows the worst time to pay a visit, and I’m afraid he’d come knocking on your door the moment you began operating from a weaker cash position where your emergency fund is concerned. Tax day isn’t until April 17 this year, and as long as you haven’t filed your income tax return, you can still contribute to your Roth IRA from the previous year. Save as much as you can and earmark it for your Roth IRA, but don’t dip into your emergency fund to contribute to retirement. Even if you can’t save enough to reach the contribution limit, you won’t miss it by much. Plus, you’ll still have a fully funded emergency fund of three to six months of expenses just in case something unexpected happens!
Why You Shouldn’t Fund IRA from Emergency Fund