Roth IRA contributions and withdrawals are usually tax-free, but the answer depends on your age, how long you've held the account, and whether you're taking out earnings or just your original deposits

The money you put into a Roth IRA — your contributions — is never taxed when you withdraw it. You already paid income tax on that money before it went in, so the IRS doesn't tax it again. The earnings your money makes inside the account — interest, dividends, capital gains — are also tax-free when you withdraw them, but only if you follow the rules. Break those rules and you'll owe taxes and possibly a penalty.

The core rule is simple: you must be at least 59½ years old and have held the account for at least five tax years before you can withdraw earnings without a tax bill. If you withdraw earnings before then, the IRS taxes them as ordinary income and adds a 10 percent early withdrawal penalty on top.

Key Takeaways

  • Your contributions to a Roth IRA come out tax-free at any age because you already paid tax on the money going in.
  • Earnings inside the account are tax-free only if you are at least 59½ and have owned the account for five tax years or longer.
  • Withdrawing earnings before age 59½ or within five years triggers ordinary income tax plus a 10 percent penalty on the earnings portion only.
  • The five-year rule applies to each Roth IRA account separately, so opening a new account restarts the clock.
  • Conversions from traditional IRAs to Roth IRAs have their own five-year rule that can affect when you can withdraw conversion money tax-free.

How contributions and earnings are treated differently

A Roth IRA holds two kinds of money: what you put in (contributions) and what your money earned (earnings). The IRS tracks these separately. When you withdraw, contributions always come out first and tax-free. Only after you've withdrawn all your contributions can the IRS consider you to be withdrawing earnings.

This matters because you can take your contributions out at any time, at any age, with no tax and no penalty. If you need money at 35 and you've put $50,000 into your Roth IRA over the years, you can withdraw that $50,000 with no consequences. But if your account has grown to $75,000, you cannot touch the $25,000 in earnings without triggering taxes and a penalty — unless you meet the age and time requirements.

The five-year rule and when it starts

The five-year rule is not about your age; it's about how long your account has existed. You must have opened and funded your Roth IRA at least five tax years before you withdraw earnings. The clock starts on January 1 of the year you make your first contribution, not the day you open the account.

If you opened a Roth IRA on December 15, 2019, and made your first contribution that same year, the five-year period began on January 1, 2019. You could withdraw earnings tax-free starting January 1, 2024 — even though you've only owned the account for about four years and two weeks. If you opened the account in 2020 and made your first contribution then, the five-year period began January 1, 2020, and you could withdraw earnings tax-free starting January 1, 2025.

Each Roth IRA account has its own five-year clock. If you open a second Roth IRA in 2024, that account's five-year period begins January 1, 2024, and you cannot withdraw its earnings tax-free until January 1, 2029 — regardless of when you opened your first account.

What happens if you withdraw earnings too early

If you withdraw earnings before you turn 59½ or before five tax years have passed, the earnings portion is taxed as ordinary income at your regular tax rate. On top of that, the IRS adds a 10 percent early withdrawal penalty on the earnings only — not on your contributions.

Example: You are 45 years old. Your Roth IRA has $60,000 in contributions and $20,000 in earnings, for a total of $80,000. You withdraw $30,000. The first $30,000 comes from your contributions (tax-free). You still have $30,000 in contributions and $20,000 in earnings left. If you then withdraw another $15,000, all $15,000 is earnings. You owe income tax on that $15,000 at your ordinary rate, plus a 10 percent penalty ($1,500), for a total tax bill of roughly 35 to 40 percent depending on your tax bracket.

Exceptions that let you withdraw earnings early without penalty

The IRS allows you to withdraw earnings before 59½ without the 10 percent penalty in a few specific situations. You still owe income tax on the earnings, but the penalty is waived. These exceptions include a first-time home purchase (up to $10,000 lifetime), may have access to education expenses, unreimbursed medical expenses, health insurance premiums if you're unemployed, and disability or medical hardship.

You can also withdraw earnings penalty-free (but still taxable) if you are the beneficiary of a deceased person's Roth IRA. The five-year rule still applies — if the original account owner had not held the account for five years, the earnings are still taxable to you, though the penalty is waived.

These exceptions are narrow and have strict definitions. "First-time home buyer" means you have not owned a home in the past two years, and the $10,000 limit is a lifetime cap, not an annual one. "may have access to education expenses" means tuition, fees, books, and room and board at an accredited school, and it applies to you, your spouse, your children, or your grandchildren. If you think an exception applies to you, check the IRS rules or speak with a tax professional before withdrawing.

Conversions from traditional IRAs and the separate five-year rule

If you convert money from a traditional IRA to a Roth IRA, that conversion money has its own five-year rule. You must wait five tax years from the year of the conversion before you can withdraw the converted amount tax-free, even if your original Roth IRA account is older than five years.

Example: You opened a Roth IRA in 2015 and have held it for nine years. In 2024, you convert $50,000 from a traditional IRA to that same Roth IRA. The $50,000 conversion is subject to a new five-year period that runs from January 1, 2024, to December 31, 2028. You cannot withdraw that $50,000 tax-free until 2029, even though your Roth IRA itself is much older. Any earnings on the converted $50,000 are also subject to the age 59½ requirement.

Conversions are taxable in the year you make them — you owe income tax on the amount converted. The five-year rule only determines when you can withdraw the converted principal without penalty.

Required minimum distributions and Roth IRAs

Traditional IRAs require you to start taking money out at age 73 (as of 2023). Roth IRAs do not. You can leave your Roth IRA untouched for your entire life and pass it to your heirs. However, if you inherit a Roth IRA from someone other than your spouse, you must withdraw the entire balance within ten years of their death, though you do not have to take annual distributions.

This is one major tax advantage of a Roth IRA: you control when you take money out, and you can let it grow tax-free for decades if you don't need it.

Frequently Asked Questions

Do I owe taxes on Roth IRA contributions?

No. You pay income tax on the money before it goes into the account, so contributions come out tax-free at any time. This is the defining feature of a Roth IRA.

Can I withdraw my contributions without penalty before age 59½?

Yes. Contributions can be withdrawn at any age with no tax and no penalty. Only earnings are subject to the age and time restrictions.

What if I convert a traditional IRA to a Roth and then withdraw it right away?

You owe income tax on the conversion in the year you make it. If you withdraw the converted amount within five tax years, you owe a 10 percent penalty on it (unless an exception applies). You can withdraw your original contributions to the traditional IRA anytime without penalty.

Does the five-year rule reset if I open a new Roth IRA?

Yes. Each account has its own five-year clock starting January 1 of the year you make your first contribution to that account. Opening a second Roth IRA does not extend the five-year period of your first account.

What counts as an "unreimbursed medical expense" for early withdrawal?

Medical expenses that you paid out of pocket and were not reimbursed by insurance or another source. This includes deductibles, copays, and procedures insurance doesn't cover. The amount must exceed 7.5 percent of your adjusted gross income to may have access to.