[Renee]

If my daughter 15 yr old has earned income of 7k and I open a Roth for her paid out of her checking, if she has the account open for more than 5 years each year adding 7k at age 20 could she access the contributions of 35k and use that for college or house in the future leaving the gains alone?

We have 26k in educational savings accounts and still contribute to that but might not be enough for college depending on scholarships.

We have 2 younger children also saving for college for them and already max out our 457 and 2 Roths.

[Sarah]

You can access roth ira contributions at any time, tax and penalty free. The five year rule is for gains.

[Lori]

Yes she could but I would encourage her to open a brokerage account on the side and use it for “stuff” and let the Roth double and double and double in perpetuity.

[Elizabeth]

The contributions are accessible at any time. You don’t even need to wait the 5 years.

[Michelle]

No need for 5 years but yes she could use the contributions whenever she wants.

Just note the opportunity cost of taking out that money instead of letting it compound for another 30+ years.

She won’t be able to put it back in the Roth IRA…

[Rob]

Don’t use it to send them to college. Let them have an income for 3 years instead so they can get online and learn literally anything they want and work for free for experience.

I learned more working 1000+ for free than I did in my entire 3 year degree.

Uni is a scam.

[Kris]

You can access contributions at any time. Just not the earnings.

[Jennifer]

I wouldn’t touch it for college and instead I’d let compound interest work its magic

[Michelle]

The 5 year rule is only for earnings (if over 59.5) and conversions.

Regular contributions can be withdrawn whenever.

[Susan]

My 17 year old puts a good deal of her earnings in a Roth.

The contributions are always able to come out tax and penalty free, the Roth is not considered for FAFSA, and it will be the last pot of money we touch, so it all might not be used for college.

[Shannon]

It seems Roth IRA would be a good alternative to 529. Since it’s not considered for FAFSA it could have a slight edge.

If you can do both, great but it seems like a good place regardless of whether you have to take it out.

I’m interested to hear what others have to say.

[Author]

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