I’ve currently got two credit cards with balances: one with $5,500 (interest rate is 9.9%) and one with $1,700 (with a 20.99% interest rate). I’ve got about $4,000 in my Roth IRA, none of which is invested. I’m trying to figure out if it’s worthwhile to withdraw the $1,700 from my IRA to pay down the higher-interest credit card and focus all my monthly payments on the lower-interest one. I’ve always been told “never borrow against your retirement,” but it seems that this might be a good idea. Help?! — N.C.

I’m not such a huge stickler to following rules of thumb to a T, but I can’t tell you whether or not borrowing from your Roth IRA is something you should consider doing unless I have a little more information from you.

Let’s start with the reasons why people say you shouldn’t borrow money from your retirement plans. The first, and most obvious, is that you’ll pay penalties for withdrawing earnings from your Roth (you mention that the money in your Roth isn’t invested in anything—some recommendations for starter funds are here).

But, you’re allowed to withdraw the money you invest in a Roth at any time without a penalty, so you may not have to worry about this. Other less obvious reasons you shouldn’t withdraw money from retirement is that the point of putting money there in the first place is to earn more money over the long term, and you won’t do that if you remove money from your account. You also don’t want to set a precedent of borrowing from retirement and have this borrowing become a frequent habit.

Okay, so let’s talk about why withdrawing $1,700 (penalty-free) from your Roth might make sense for you. That 20.99 percent interest rate is pretty burdensome, and depending on how much of a dent you’re making on that balance every month, you might be getting slammed by the accruing interest on your credit card. Considering that the average annual compounded rate of return for Roths is about 10 percent (based on figures from Jan. 1970 to Dec. 2009), it would make a lot of sense for you to withdraw money from your Roth and eliminate that debt. The tricky part is making sure that debt remains eliminated. Cut up the card, or close the account.

And here’s where I need more information from you. I don’t know how much you make. I don’t know how much money you’re throwing at your credit card every month. If you’re paying down the balance on your card by hundreds of dollars every month, and can just eliminate the debt that way—great, stick with it, you don’t need to borrow money from retirement to pay off that debt. If you’re paying off a little bit of the principal on your card every month, I’d definitely consider withdrawing $1,700 to eliminate that high-interest debt. Just be sure to budget out a way to make up for the Roth withdrawal, and try to max out your Roth contribution for the year.

More Reader Mail

Photo: PhotoSteve101

I’m a recent college graduate and have been working as a government contractor for the past two years. I have saved about $15,000, which I have mentally divided into thirds: travel/fun money, emergency money, and long-term savings money. I have about $4,000 in Stafford Loan debt leftover from college and no consumer debt.

Next month I’m starting graduate school and will be living on a fellowship of $30,000/year for the next 5-6 years. I have a budget planned and intend to save $500/month while in school. My question is: What should I do with the money I have already saved? Should I pay off my student loan debt? Open a high-yield savings account? Start a Roth IRA, even though I wouldn’t be able to contribute to it during school? Also, should I continue paying off my student loan debt while in graduate school, or defer until I (hopefully) earn a higher salary? Any other advice for living responsibly on $30K until I’m 30 would be appreciated. — E.J.

I have a sneaking suspicion that a recent college graduate who has $15,000 saved up—and knows a thing or two about Roth IRAs—already has a pretty good handle on his or her finances. Depending on where you went to college, most students graduate with more debt than they have in savings, so, well done.

Let’s go through your questions one at a time. Should you pay off your $4,000 Stafford loan? I would. You’d still have $11,000 in savings, and you’d also be debt-free. A lot of people dream about a day when they won’t have to make another payment to a loan company, and for you, that day could be today. As someone with no consumer debt, it sounds like you’re the sort of person who doesn’t like to owe anyone anything. Pay off that loan, and make that leap. You’d save more on interest payments than you would gain by putting that money in a high-yield savings account.

Should you open a high-yield savings account? Yes! I don’t know where you’re keeping that $15,000 now, but if it’s in a checking or savings account at a big bank you’re probably not earning any interest on it. It shouldn’t cost anything to open a high-yield savings account, as long as you’re opening it at the right bank. I’ve suggested Ally before, but if you look at Bankrate.com, it looks like Barclays is currently offering a respectable 1 percent APY, with interest compounded daily, and no monthly fees or minimum balance required.

Should you open a Roth IRA, even if you wouldn’t be able to contribute to it during school? Yes, totally! If you’ve earned income this year, and are eligible to open and contribute to a Roth IRA, you should open one and contribute the max. Here’s why:

• Even if you’re not contributing to your Roth IRA account while you’re in school, your initial contribution will benefit because of compound interest.
• You’re allowed to withdraw any amount of money you put into your Roth account at any time without having to pay a penalty. So if you put $5,000 from your savings into the Roth account, and decide you need that $5,000 later, you’re totally allowed to withdraw and use that money. You only have to pay a penalty if you withdraw any interest that your account has earned.
• Open an account now, because after it’s been open for five years, you can withdraw up to $10,000, including earnings, to buy your first home (if you’re the sort of person who wants to own a home some day).

Also, do you know for sure that you won’t be able to make any contributions to your Roth account while you’re in grad school (I’m guessing you think this because you technically won’t be “earning” income)? Check with your financial aid office to see if your fellowship grant will be reported on a W-2 form, because if it is, it may be considered earned income by the IRS, and you may be eligible to make Roth contributions.

As for advice for living responsibly, you’re already planning on socking away 20 percent of your fellowship money—you’re pretty much there! Keep at it, and have fun in your graduate program. Go to happy hour with your study group. Have dinner parties. And if one of your professors asks you to come to her house to help her bake a turkey for Thanksgiving, do it. You’ll have a hilarious story to tell later.

Photo: Flickr/Alamosbasement

I recently procured my first real job (score!), and have come up with a basic budget and blah blah blah. Beyond that though, I do not know what I should be doing to get started at Being A Real Adult Who Makes Good Money Decisions. I have a basic Wells Fargo checking account and a small savings account that was created for me by my parents or something at some point. I also have two credit cards with no rewards to speak of but also no debt. Thats it. That’s what I’m working with.

Should I take the money from my Wells Fargo savings and put it into a high yield savings account like Ally? Should I cancel my credit cards and get a new one with better rewards? Should I start an IRA, or do something else that sounds overwhelmingly confusing? Where should I put the money that I manage to save from my paycheck each month (hopefully about $300-400)? Also, I suppose it should be mentioned that in my particular case, my employer has a retirement option and will start matching (5% I think) after a year. Any advice would be a godsend. I just want to make sure that I make the best choices possible for my future! — S.C.

I’m always really glad when I hear someone who is coming out of college and getting their first job say they want to make the best choices for their future. I mean, you’re not getting grades anymore, but: A+ work! A thing that happens when people get their first jobs sometimes is that they’re suddenly earning income, and that income immediately goes to buying “things”. We all want things, of course, but it’s just so much more important to get a grip on your money before you start spending it. 

Starting out with no debt will give you a great head start. Keep it that way. The first two things you should be doing is paying off your debt, and starting an emergency fund, which it sounds like you’re doing with your Wells Fargo savings account. Set a savings goal of $1,000 at first, and then once you hit that number, just keep saving to have a nice amount of cash to fall back on in case you ever lose your job, or experience any other kind of emergency. Don’t worry about the rules of thumb you hear about from financial advisors saying you need 3 months, or 6 months, or a year’s worth of savings to get you through hard times. That’s just a broad way of saying you need to have an emergency plan set in place. Everyone has a unique set of circumstances. If you have parents or siblings or really close friends who would let you crash with them during a long period of unemployment, that’s a significant amount of living expenses you won’t have to worry about paying while you’re looking for a way to earn money, and that’s really great. So: Have an emergency fund, but have an emergency plan too.

Once you have a plan in place, you can now figure out ways to make your money work for you. I just looked up the interest rate for Wells Fargo and it’s just terrible: 0.01 percent. Yes! Move that money to a higher yield savings account like Ally or ING Direct.

Don’t get too caught up on getting rewards credit cards. Although there are people out there who really know how to make them work for them (and you might be one of them!), it’s really easy to rack up a ton of debt on credit cards, so I only use them rarely. And remember that your credit score will get slightly affected if you cancel your cards, so if you’re doing that to get rewards cards, keep the one you’ve had the longest because it’s the one showing the longest period of time that you’ve been able to make regular payments and be a responsible adult, and that’s a great thing to be able to show to creditors if you’re going to be doing things like renting an apartment, buying a car or a home one day. I was one of six people who put in an application to rent my current apartment, and I’m sure my high credit score was one of the reasons my landlord chose me as the tenant he wanted to have.

Lastly, get started in your company’s retirement plan. You don’t have to contribute too much until your company starts matching your contributions, but it’s important to simply get started. Remember that the money you put into a 401(k) is tax deferred, so even if you don’t get a match this year, you’ll still benefit next year when you’re filing your taxes. And, yes, open an IRA—a Roth IRA if your income allows you to do that because you want to start making compound interest work some magic for you. It’s really easy to do, I promise. You can start one with one of the big three: Vanguard, Fidelity, and T. Rowe Price (I chose Vanguard). Call the one that sounds the best to you, and tell them you want to start a Roth IRA. They will take care of the rest for you and make the process as painless as possible. You are giving them your money to safeguard, so they are willing to do whatever it takes to make this as stress-free as possible. Welcome to adulthood.

Photo: Chris Breikss/Flickr

OK, I am a young professional with a good job that I got in 2008 after graduating college. Since my hiring, I’ve managed to put away about $12,000 into a savings account, and a few months ago my parents gifted me another $20,000 because they gave up on me ever having a wedding.

So that leaves me with $32,000 in a savings account. I also have a checking account with a balance of $14,000 (more savings I’ve put away from my job) that I use to cover my monthly expenses so basically the $32,000 is just sitting there. It makes like $2 in interest every statement or something.

But here’s the deal, I have NO plan for this money. I already have a 401(k) with a match that I contribute the max to. My car is old and I should probably get a new one, I don’t have a Roth IRA, I don’t want or have a house, and I like my job but would be open to taking another awesome job if one opened up. I have no debt at all.

What would you do with that money and those circumstances?

P.S.: It might help to know that by nature I’m frugal and prefer to live beneath my means. — Anonymous

Mike: So Logan, I am totally proud of this person

Logan: I’m totally shocked and awed by this person. Like: way to save. But also: Maybe you should live a little? Like, what has she been doing with herself (or himself)?

Mike: Okay, I think I need to say it again. I am so proud of this person! Person! I want to give you a hug!

Logan: Okay, high five person. Well done. 

Mike: Also, Logan, remember just because this person is saving, doesn’t mean this person is not living a full life. I think I’ve explained that pretty well this week. But! I will agree that after this person does things like open a Roth IRA (I think I’ve been a broken record on that one), or a traditional IRA if this person earns more than $105,000, which is really possible considering all the savings, I do want this person to do a little nice thing for themselves. Go on vacation! You deserve it!

Logan: Yes. I just want to make sure this person is living in the Now as much as in the Future. Also: I want to know how s/he saved that much money. We don’t know how much s/he makes. It might be tons. Also: I’m very interested in “preferring to live below my means.” How does that work? And why would someone prefer that?

Does Not Compute.

Mike: Well, it means this person isn’t living paycheck to paycheck, which is the trap a lot of people fall into. It means choosing to live in a normal size apartment instead of one with a swimming pool, and a gym, and a doorman who can accept your packages for you. I think what happens to a lot of people when they go from earning a little bit of money to a lot of money is this thing called “lifestyle creep.” Which means, they upgrade everything in their life. Goodbye, old car! Hello, BMW! See ya, apartment with no amenities! I am guessing you would be the sort of person who would totally upgrade everything in your life if you started earning a lot more money. The problem with that is that although you are earning more, you’re really not saving any more, you’re just spending more.

Logan: You’re right. You’re right. This person is great. I’m not sure I have anything to say to him or her though. Like, I think we live on different planets.

Mike: Oh, I think we can bet on that. But I think we’re all living on our own respective planets when it comes to our money. Like “Le Petit Prince.” I’m certainly not on that same planet, because I don’t think I’m as frugal.

Logan: Let’s talk about that, because I’m not sure that’s something that your Internet Fan Base knows about. Like, Internet: Did you know Mike Dang once spent $200 on cheese for a dinner party?

Mike: Haha. It was $150, yes, and it was for my one big party of the year where I invite my friends over and tell them I love them and give them cheeeeeeeeese to eat. I could afford that though! And I am happy to splurge every now and then because you have to remind yourself that life doesn’t always mean being a miser and watching the dollars in your account grow. You have to remind yourself to live a little. And I want this person to live a little if they are up for it.

Logan: Me, too! I think this person should go live a little in some other country. Maybe Paraguay?

Mike: I mean, if they really wanted to go all out, they could contribute $5,000 into an IRA, and then contribute the $17,000 max into a 401(k), but I don’t think that’s necessary—unless it’s something this person wants to do. They’d still have money leftover to live a little.

Also, before this person goes to Paraguay, I definitely think they deserve a new car

Logan: Well, if they want. Cars are a boring thing to spend all your money on. Get like, a 2000 Honda Civic and call it a day. I bought a new car once, not so fun!

Mike: Yes, cars are depreciating assets, meaning they go down in value significantly every day you drive it. I’m guessing this frugal person will get a used car anyway! Also, I think it’s pretty insane that this person has $14,000 in his or her checking account. You should have enough to pay the bills, and the rest should go into savings so it can accrue the interest! Get some of that money into a CD (certificate of deposit) or a high yield savings account.

Logan: Okay. So like, dream scenario, this person should take a couple thousand and trade in his or her crappy car for something reliable. And maybe put like, IDK, $10,000 in one of those fancy retirement accounts you were talking about. And then spend the rest on Paraguay.

Or Paris.
Or Portugal.
Or Poland.
Really anywhere that starts with a P.
Portland.
Other Portland.
Providence.
Pakistan.
Papua New Guinea.

Mike: I just want this person to be happy, really. I mean, not everyone likes to travel. If going to the ice cream parlor and getting a sundae is what makes this person happy, then that’s what this person should do. I mean, I am proud of this person, and I want him or her to do the thing that he or she loves.

Logan: Me, too. And if that thing involves taking us both on a trip to Paraguay, or buying us ice cream, well, all the better. Sharing is caring. As they say.

Mike: Haha. Yeah, the good thing about having money is that you can be generous with it if you want. Or you can be a Scrooge if that makes you happy! It’s your money. Hey. Can we talk about this person’s parents giving him or her $20,000 because they were like, “Well, guess you won’t ever be getting married!” I mean!

Logan: Ha, yeah that’s crazy. And also like “giving up” when s/he is like what … 25? 26? But I mean, good for them for saving all that money. That was really nice. Even if it was for something stupid like a wedding.

Mike: I know! So I just Googled it. The average cost of a wedding in 2011 grew to $27,000, according to TheKnot. I mean go for it, if you have the means, but come on.

Logan: The Wedding Industrial Complex is totally ridiculous. I mean, super fun. But ridiculous. I’d rather go to Paraguay.

Mike: Me too. Let’s get fake married in Paraguay.

Logan: On this person’s dime. Sold. Person! We solved your problem! Okay bye!

Mike: Person, one last time: High five!

Photo: Flickr/Arcadius

I don’t have any retirement savings. I had precisely one opportunity to sign up for a 401(k), after I’d been working for a year at a grocery store (it was Portland), but I thought I was quitting soon, so I didn’t sign up. I stayed for another year.

I also don’t have a Roth IRA. No excuse for that one—I could set one up any time (I could set one up right now). It just doesn’t seem pressing. Or practical. I need all the money I have (and a little bit more) right now. I can’t be thinking of my future self! I’ve got my now self to take care of.

Despite mounting evidence to the contrary, I understand how money works. I get it, intellectually. I understand how interest works, in both directions—that it costs money to borrow money, that it makes money to squirrel it away in the right kinds of accounts. But no matter how many times Mike Dang explains to me the wonders of compound interest (and oh, it’s a lot!), I’m just not swayed to do anything with that information.

My parents both retired at 60 with state pensions (which I’ll never have) and fat retirement savings (which I also won’t ever have). Good for them! They have a great life. Well done. But I’ve been living paycheck to paycheck since I got my first paycheck, and I really just don’t care to think too much into the future (though, perhaps I might start at least thinking a few days into the future, for convenience). Because here is a secret: I could die tomorrow. So could you! And I am interested in living my best life now and not pulling my hair out over what I’m going to do in forty years.

Do you know what we know about the world in forty years? Nothing. We don’t know anything. I do a lot of big thinking on airplanes. Several of my moves have been hatched at 32,000 feet, plus some schemes that petered out once I was back on the ground (I spent one flight from Virginia to Portland totally obsessed with the idea that moving to Alaska and working for an oil company would solve every problem I’d ever had). But I also spend a good amount of my in-flight time coming to terms with what I assume will be imminent death (takeoff and landing man, that’s what gets you). As we’re cruising along, I always wonder: Is this it? And if it is, am I okay with that? I always am. No regrets. And one thing that never, ever crosses my mind: “I really wish I had put more of my money into an account that I couldn’t access or use until I’m 59-and-a-half.”

Things That Seem More Likely To Me Than Growing Old And Having No Money or Means To Get Money

• A planet colliding with our planet
• An asteroid colliding with our planet
• Gamma rays
• Winning the lottery
• Rising sea levels wipe out eastern seaboard
• Tsunami wipes out eastern seaboard
• Worldwide economic collapse
• Plane crash
• Writing a thing and getting it optioned for a zillion dollars
• War with China
• War with Iran
• War with North Korea
• War with anyone, really
• Grey goo
• Nuclear meltdown
• Massive earthquake
• Someone who loves me has a zillion dollars and a generous heart
• Nuclear bomb
• Heart attack
• Brain aneurism
• Vacuum metastability event
• MRSA
• Cancer
• Aliens
• Windfall inheritance from relative I’ve never met/heard of
• Dinosaurs
• Getting jumped, killed on the way home from work
• Plague
• Flu
• Starting a company and selling it to Facebook
• Ebola
• Sniper
• Someone breaks into my house and murders me
• Getting hit by a car and dying
• Getting hit by a car and not dying, suing, and getting a zillion dollars
• Super storms
• …. but not zombies, give me a break. Totally unrealistic.

Photo Credit:flickr/Nasa Goddard Photo and Video

A reader asks:

I have a somewhat specific and possibly stupid question: I found your posts on 401(k)s and IRAs really helpful, and while you gave great advice about traditional IRA vs. Roth, I’m not sure how to choose between 401(k) and Roth IRA? My company matches up to three percent in my 401(k), so hell yeah free money, that’s what I’m currently enrolled in, but should I roll it over into a Roth IRA? You gave pretty compelling evidence in your IRA post about how Roths are superior to pre-tax IRAs, but what about the whole matching issue?

We don’t have a formal advice column yet, but we’re more than happy to take your questions. I’m not a “financial advisor” so I’m not going to tell you how to invest your money, that said, this question is an easy one!

This is a thing that I have done, and what most smart money people recommend: If you are lucky enough to work at a company that provides a 401(k) plan and a company match, contribute just enough money to get the full match, because yes, free money! Once you get that done, open a Roth IRA and contribute the maximum for the year, which is $5,000 if you’re younger than 50. And then if you’re this amazing person who still has more money to put away for retirement, go back to contributing to your 401(k) until you max that out. Most young people won’t get to this last part where you max out the 401(k) because the max is $17,000, and most people aren’t saving $17,000 a year. If you are, whoa, you’re amazing and will be a very rich old, and all the other olds will be jealous of you.

We’re not here to just to answer these “traditional” questions about money (but we will if that’s what you want!). Want advice on what to do when your friend owes you money, but you don’t know how to bring it up because you feel awkward about it? Or what to do when the guy or girl you’re dating practically lives at your place but isn’t paying rent? We love those questions. Send us an email!

Photo Credit: Flickr/Solo with others

Why you need to know this: A Roth IRA is the retirement account financial planners say all young people should have.

I don’t know how to stress this enough: If you’re not already saving for retirement (i.e. through a 401(k) plan at work) open an IRA account. Do it.

An IRA is an Individual Retirement Account, and putting money into an IRA is the easiest way to have lots of money when you’re ready to retire (because of this thing called compound interest that I’ve already talked about).

Okay, stay with me because this might get boring, and I’m trying not to make this boring. I want you to have more money than you ever dreamed of when you’re an old person, and IRAs make this possible. You might be thinking, ugh, retirement. That’s like, 40 years away, and I don’t want to even think about it right now!

Don’t think that. That’s dumb. I know it’s worth it to put money into a retirement account when you are in your twenties, because I have a retirement account that I opened when I was 25, and there is so much more money in that account right now than I originally put in it. 

There are two types of IRAs: A traditional IRA and a Roth IRA. A traditional IRA works very similarly to a 401(k) in that you can put tax-free money into an investment account. You only pay taxes when you withdraw the money during retirement.

A Roth IRA uses after-tax money, which means you can invest money that’s already been taxed from your paycheck, and you won’t have to pay any taxes when you withdraw the money during retirement. A Roth IRA is also the investment account that almost every financial person says a young person should have. So if you’re choosing between a traditional and a Roth IRA, you should definitely open a Roth. The current limitation is that you can’t invest in a Roth if your adjusted gross income is more than $125,000 as a single person, or $183,000 as a married person, but I’m guessing that if you are a young person reading this, that’s not going to be an issue (but if you are earning more than that — whoa, congratulations, put your money in a traditional IRA).

Other things to know about a Roth IRA:

• You can’t contribute more than $5,000 a year into a Roth IRA (or $6,000 if you’re over 50). You can contribute to both a Roth and a traditional IRA, but the sum can’t equal more than $5,000 ($6,000 if you’re over 50). The deadline to contribute to your Roth IRA is the same as the tax deadline. So if you want to make a contribution for 2011, you have until April 15, 2012 to do it.
• You will have to pay a penalty tax if you withdraw any earnings from your Roth IRA before you are 59 and a half years old. But, you’re allowed to withdraw the money you invest in the account at any time without a penalty. So if you put $5,000 in a Roth IRA, you can withdraw that $5,000 any time you want (But, don’t do that. The whole point of putting your money into an IRA is to earn more money. You won’t earn more money if you take it out).
• If your account has been open for at least five years, you can withdraw up to $10,000 — including earnings — to buy your first home. This is another reason why you should open an account as soon as you can.

How to open a Roth IRA account:

Before opening a Roth, Jay Hutchins, a financial planner in New Hampshire, tells me that you should make sure you have some sort of emergency fund set up. You need something to fall back on in case of an emergency, and your Roth IRA shouldn’t be it. Also, don’t ignore your credit card debt. Make an effort to eliminate that debt while you’re investing in your IRA.

Okay, now that we’ve got that settled, you’ll need the following things to open an account:
• Your social security number
• Your driver’s license or another form of ID
• Your bank account information (routing and bank account numbers)
• Your employment information (name and address)
• Names, social security numbers and birthdates of people you want to designate as your beneficiaries (who you want to have your money if you are dead)

Next, figure out where you want to open your Roth IRA. You can use a discount brokerage company like E*Trade, or Schwab. Discount brokerage firms charge clients lower fees, but sometimes offer fewer services than bigger brokerage firms (liking offering investment advice). Or you can open an account at one of the big three firms — Fidelity, Vanguard and T. Rowe Price — which provide much more services (personally, I chose one of the the big three — Vanguard — because I like having more options available). Some firms will require that you have at least $1,000 available to deposit to open an account, but there are also other plans available for people who are starting out with less than that. T. Rowe Price, for example, has a program that allows you to invest as little as $50 a month in a Roth, as long as you sign up for an automatic investment plan.

Once you’ve figured that out, you can open an account online, over the phone, or at a brick and mortar location. The rest of the process should be easy because whoever is helping you will explain everything you need to do.

The last thing you’ll have to do is choose investments for your account. You can ask your brokerage firm for advice, and do some research using Morningstar, a financial data provider. Christine Benz, director of personal finance at Morningstar, says that if there is one single fund she recommends, it’s Vanguard’s STAR fund, which is a balanced fund consisting of 60 percent stocks, and 40 percent bonds with moderate market risks.

You’re off and running! Congrats — you’re now ahead of the game.

Recap!
• There are two types of IRAs, traditional IRAs, and Roth IRAs. A traditional IRA works similarly to a 401(k) in that it uses pre-tax money for investments. You will pay income taxes on money you withdraw during retirement. A Roth IRA uses after-tax money for investments, which means you won’t have to pay any taxes on money you withdraw during retirement.
• A Roth IRA is the investment account that most financial advisors suggest young people have.
• You cannot open a Roth IRA if you earn more than $125,000 as a single person, or $183,ooo as part of a married couple.
• You cannot contribute more than $5,000 a year into a Roth IRA ($6,000 if you’re over 50). The annual deadline to contribute to your IRA is the tax deadline: April 15th.
• You will have to pay income taxes and a 10 percent penalty tax if you withdraw earnings from a Roth account before you are 59 ½ years old.
• If your Roth account has been open for five years, you can withdraw up to $10,000 from your account to buy your first home.