If you pull money out for an emergency then how do you replace that withdrawal? Your yearly contributions are limited. Or can you take out a loan on a Roth? That is something I have never thought about.
I didn't know that I had to replace that money. I thought I was free to take out what I put in but not the interest.
You do not and cannot put back money you have withdrawn. There is no loan from an IRA. There might be a loan option from a 401k, at the discretion of your plan. But then there will be a payment plan to put it back, and it is immediately due if you quit your job, or it is counted as a nonqualified withdrawal.
Thanks. I wouldn't intend to replace it. It was Rob_bob's comment that confused it me. Made me believe that I had to do that.
I wasn't thinking that you would fund a Roth purely as an emergency fund since my Roth is for retirement so I want max $$ in it.
There seems to be some confusion here. A Roth IRA is just a 'vehicle' or 'bucket' for your money, and it happens to have tax-favorable conditions. Inside your Roth you can invest in almost anything you'd like, from holding cash to bonds, index funds, individual stocks, precious metals, foreign currency or REITs. One school of thought is that if you plan on relying on savings within your Roth as your emergency fund you should have that money invested in cash-equivalent investments.
A person can take out contributions at any time, penalty free, for whatever reason because you've already pay taxes on those contributions. Once per year you can take contributions out of your Roth and put them back within 60 days - this can be one strategy for meeting a sudden, unexpected expense. One could also just take out contributions and not replace them, declaring the distribution on their taxes and losing out on future tax-free growth of that money.