Roth IRA Withdrawal Rules: When You Can Take Money Out

Roth IRAs have the most flexible withdrawal rules of any retirement account — but the rules have important nuances that, if misunderstood, can trigger unexpected taxes and penalties.

The fundamental distinction: contributions vs earnings

• Contributions (money you put in): Can be withdrawn anytime, at any age, with no taxes or penalties. This is money you already paid tax on.
• Earnings (investment growth): More complex — withdrawal rules depend on age and account age.

The 5-year rule (two separate rules)

Rule 1 (for qualified distributions): Your Roth IRA must be at least 5 years old before earnings can be withdrawn tax-free — even after age 59½. The clock starts January 1 of the year you make your first Roth IRA contribution. Open a Roth IRA with $1 today, and the 5-year clock starts this calendar year.

Rule 2 (for conversions): Each conversion has its own 5-year seasoning period for penalty-free withdrawal of converted funds (before age 59½). This is the clock that matters for the Roth conversion ladder.

The withdrawal ordering rules

The IRS defines a specific order for Roth IRA withdrawals:

1. Regular contributions (first out — no tax, no penalty)
2. Conversions (second — no income tax, 10% penalty if under 59½ and within 5 years of conversion)
3. Earnings (last — taxable and 10% penalty if not a qualified distribution)

Exceptions to the 10% early withdrawal penalty

• First-time home purchase (up to $10,000 lifetime)
• Disability
• Substantially equal periodic payments (72t SEPP)
• Higher education expenses
• Health insurance premiums during unemployment
• Qualified reservist distributions
• Death of account owner