Roth IRAs do not require withdrawals during your lifetime

A Roth IRA has no required minimum distributions (RMDs) while you are alive. You can leave the money in the account for as long as you want, and the IRS will not force you to take any out. This is one of the main advantages of a Roth over a traditional IRA, where you must start withdrawals at age 73 (as of 2023).

You can withdraw your contributions (the money you put in) at any time without penalty or tax. Withdrawals of earnings (the money your investments made) before age 59½ usually trigger a 10% penalty plus income tax, unless you meet a narrow exception like a first-time home purchase or disability. After age 59½, you can withdraw earnings tax-free as long as the account has been open for at least five years.

The five-year rule is separate from the age rule. Even if you are older than 59½, earnings are tax-free only if you opened your first Roth IRA at least five years before the withdrawal. If you convert a traditional IRA to a Roth, a new five-year clock starts for that conversion amount.

Key Takeaways

  • You will never face a required minimum distribution from a Roth IRA while you are alive, no matter how old you are or how much money is in the account.
  • Your contributions can be withdrawn tax-free and penalty-free at any age, but earnings withdrawals before 59½ usually cost you 10% plus income tax.
  • After age 59½, earnings come out tax-free only if the Roth account has been open for at least five years.
  • Your beneficiaries will have to withdraw the entire account within ten years of your death, starting in 2024.

What happens to a Roth IRA after you die

When you pass away, the no-RMD rule ends. Your beneficiaries must withdraw all the money from the Roth IRA within ten years. This deadline applies whether the beneficiary is a spouse, child, or other person you named.

The ten-year window started in 2024 for most beneficiaries. Before that, the rules were different depending on who inherited the account. A surviving spouse could treat the Roth as their own and keep the no-RMD benefit. Other beneficiaries had to empty the account within five years or take annual distributions. Those old rules no longer apply.

The money your beneficiary withdraws is tax-free if it came from contributions or if the account met the five-year rule. If the account was very new when you died, some earnings may be taxable to the beneficiary, but this is rare.

Exceptions that let you withdraw earnings early without the 10% penalty

Even though earnings withdrawals before 59½ normally cost 10% plus tax, the IRS allows penalty-free withdrawals in specific situations. The withdrawal is still taxable as income, but you avoid the 10% penalty.

The main exceptions are: you become disabled; you have a serious medical condition and medical expenses exceed 7.5% of your adjusted gross income; you are unemployed and taking distributions to pay health insurance premiums; you are a first-time home buyer (up to $10,000 lifetime); or you are taking distributions as part of a court-ordered divorce settlement. You must have documentation for each of these — a disability information letter, medical bills, proof of unemployment, or a divorce decree.

Contributions themselves have no penalty at any age, so if you are unsure whether you can afford to leave the money alone, you can always withdraw what you put in without consequence.

How the five-year rule works across multiple Roth accounts

If you own more than one Roth IRA, the five-year clock is based on when you opened your first Roth, not each individual account. Once five years have passed since you opened any Roth IRA, all your Roth accounts may have access to for tax-free earnings withdrawals (assuming you are also 59½ or meet an exception).

Conversions are different. If you convert a traditional IRA to a Roth, that conversion amount has its own five-year holding period. You can withdraw the original contribution portion of a conversion immediately, but the earnings on that conversion must sit for five years. This matters if you convert a large amount and want to access part of it quickly.

Roth IRAs versus traditional IRAs on the RMD question

A traditional IRA requires you to start taking distributions at age 73. The IRS calculates the minimum amount based on your age and account balance, and you must withdraw at least that much each year or face a 25% penalty on the shortfall (reduced to 10% if you correct it within two years). This applies whether you need the money or not.

A Roth IRA has no such requirement. If you do not need the money, you can let it sit and grow tax-free for decades. This makes a Roth a better choice if you have other income sources and want to leave the account to heirs. It also makes a Roth useful if you want to delay withdrawals until you are much older and in a lower tax bracket.

The tradeoff is that Roth contributions are made with after-tax dollars, while traditional IRA contributions may be tax-deductible in the year you make them. Your tax situation and retirement timeline determine which account type makes more sense for you.

Frequently Asked Questions

Can I withdraw my Roth IRA contributions without paying tax?

Yes. Contributions come out tax-free and penalty-free at any age. The IRS knows what you contributed because you reported it when you made the deposit. Keep records of your contributions so you can show the difference between what you put in and what your investments earned.

What if I need money before age 59½ but after the five-year rule?

If your Roth has been open five years and you are 59½ or older, you can withdraw earnings tax-free. If you are younger than 59½ but the account is five years old, you can still withdraw earnings, but they are taxable and subject to the 10% penalty unless you meet an exception like disability or first-time home purchase.

Do I have to take money out of my Roth IRA at any point?

Not while you are alive. You can leave it untouched forever. After you die, your beneficiaries must empty the account within ten years. If you want to leave money to heirs, a Roth is often better than a traditional IRA because the withdrawals are tax-free to them.

What if I converted a traditional IRA to a Roth — does the five-year rule apply?

Yes, but only to the earnings on the conversion. You can withdraw the amount you converted immediately. The earnings that built up on that converted amount must wait five years. If you convert multiple times, each conversion has its own five-year clock for the earnings portion.