Should I put my after-tax savings in a Roth IRA?

I have a decent sized savings account. Does it make sense to put some of this money, around $5,000, into a Roth IRA. I am looking at about 15 years until retirement and I fund my 401(k) at 10%. I was thinking that since my savings are already taxed, why not start putting them in a Roth. I will still have money left over for an emergency fund. Should I do this?

Retirement Savings, IRAs
Sort By:
Most Helpful
March 2017

I think it would make sense. Remember, with a Roth you can always with draw your contribution penalty free/tax-free for any reason. Only earnings are subject to early withdrawal penalties. So, a Roth is a great dual purpose account. It provides emergency money if needed or long-term retirement supplement if not.

If your primary purpose is an emergency fund, open the Roth at the bank and buy a 1, 2, and 3 year CD. That way you have 1/3 of the account available every year.

If your primary purpose is retirement, look at a conservative fund, like a Vanguard Target date fund, based on your years until retirement. Or open a brokerage account and buy one or two of the dividend aristocrats and reinvest your dividends.

March 2017
March 2017