Posted by Denise Kovach, CFP®, AIF®
It is possible, because the principal is available without penalties anytime.
The earnings, however, are not available until you are age 59-1/2 and your initial Roth contributions were made 5 years before. Exceptions include a first time home purchase or death/disability if before age 59-1/2, but a 10% penalty will be triggered for early withdrawal if the 5 year period has not been met.
Roth conversions and Roth 401k rollovers each have their separate 5 year holding period.
This strategy may be appropriate for someone who cannot afford to fund an IRA AND emergency fund, so by contributing to a Roth they are killing two birds with one stone.
Roth IRAs were created to allow investors to get tax-free growth for their retirement. So when you withdraw money from it you will lose the benefit of having that money grow tax-free over many years. And, that’s why you opened it in the first place.