You can withdraw your contributions anytime, but earnings have strict rules

A Roth IRA lets you take out the money you put in — your contributions — whenever you want, with no penalty and no taxes owed. The earnings those contributions generated are different: you cannot touch them before age 59½ without paying income tax plus a 10% penalty, with a few narrow exceptions. The IRS treats contributions and earnings as separate buckets, and you need to know which one you are actually withdrawing from.

The reason this matters is that many people assume they can raid their Roth whenever they need cash. You can, but only if you are withdrawing contributions, not growth. If you have had the account for five years or longer and you are over 59½, you can withdraw everything tax-free and penalty-free. If you have not met both conditions, the IRS will charge you to pull out earnings.

Key Takeaways

  • Contributions (the money you deposited) can be withdrawn at any time without penalty or taxes, regardless of your age or how long you have owned the account.
  • Earnings (investment growth) cannot be withdrawn before age 59½ without owing income tax plus a 10% penalty, unless you meet a specific exception.
  • You must have owned the Roth IRA for at least five tax years before you can withdraw earnings tax-free, even after age 59½.
  • Exceptions to the early withdrawal penalty include disability, medical expenses over 7.5% of income, and first-time home purchase (up to $10,000 lifetime).
  • The IRS assumes you withdraw contributions first, then earnings, so you do not automatically owe penalties just because you took money out early.

The difference between contributions and earnings

Your contributions are the dollars you actually deposited into the account yourself. If you put in $7,000 per year for three years, you have $21,000 in contributions. That $21,000 is yours to withdraw whenever you want. The IRS does not tax it on the way out because you already paid taxes on that income (or it was a non-deductible contribution, which you reported when you filed).

Earnings are the investment gains — the interest, dividends, and capital gains your money made while sitting in the account. If your $21,000 in contributions grew to $28,000, the $7,000 difference is earnings. That $7,000 has never been taxed. If you withdraw it before age 59½ and before the five-year rule is met, the IRS taxes it as ordinary income and adds a 10% penalty on top.

The IRS assumes you withdraw contributions first. So if you have $21,000 in contributions and $7,000 in earnings, and you withdraw $15,000, the IRS treats that as $15,000 of contributions coming out. You owe nothing. Only when you go past the contribution total does the IRS consider you pulling out earnings.

The five-year rule for earnings

Even if you are over 59½, you cannot withdraw earnings tax-free unless you have owned the Roth IRA for at least five tax years. This is separate from the age rule — you need both. The five-year clock starts on January 1 of the tax year you made your first contribution to any Roth IRA (not just this one). If you opened a Roth in 2020 and made a contribution, the five-year period ends on January 1, 2025.

This rule applies to each Roth IRA separately if you have more than one, but the five-year period is measured from your first Roth contribution ever, not from when you opened each account. So if you opened a Roth in 2020, contributed, then opened a second Roth in 2023, both accounts are may be able to access for tax-free earnings withdrawal after January 1, 2025 (assuming you are also 59½).

If you withdraw earnings before the five-year rule is satisfied, you owe income tax on those earnings plus the 10% early withdrawal penalty — even if you are over 59½. The age rule and the five-year rule both have to be met.

Exceptions that let you withdraw earnings early

The IRS allows you to withdraw earnings before 59½ without the 10% penalty in a few specific situations. You still owe income tax on the earnings, but not the penalty. These exceptions are narrow and require proof.

Disability: If you become totally and permanently disabled, you can withdraw earnings penalty-free at any age. You will need documentation from a physician stating you cannot work. The IRS defines this strictly — it is not just any disability, but one that prevents you from doing any substantial work.

Medical expenses: You can withdraw earnings penalty-free (but not tax-free) to pay unreimbursed medical expenses that exceed 7.5% of your adjusted gross income. You have to itemize deductions on your tax return to use this exception, and you have to actually pay the medical bills — you cannot just withdraw the money and keep it.

First-time home purchase: You can withdraw up to $10,000 in earnings penalty-free (but not tax-free) to buy, build, or rebuild a first home. "First-time" means you have not owned a home in the past two years. This is a lifetime limit across all your IRAs, not $10,000 per year.

Substantially equal periodic payments (SEPP): If you set up a series of equal payments based on your life expectancy, you can withdraw earnings penalty-free before 59½. You have to follow IRS formulas and take the payments for at least five years or until you turn 59½, whichever is longer. This is complex and usually requires a tax professional.

What happens if you withdraw earnings early without an exception

If you withdraw earnings before age 59½ and you do not meet an exception, you owe two things: income tax on the earnings at your regular tax rate, plus a 10% penalty on top. If you withdrew $5,000 in earnings and you are in the 22% tax bracket, you owe $1,100 in tax plus $500 in penalty — $1,600 total.

You report the withdrawal on Form 8606 when you file your tax return. The IRS will know about it because your bank or brokerage sends them a report. If you do not report it correctly, the IRS will contact you and charge interest on top of the tax and penalty you owe.

Roth conversions and the pro-rata rule

If you converted money from a traditional IRA to a Roth IRA, that conversion is treated differently. Converted money is subject to a separate rule: you cannot withdraw it penalty-free for five years after the conversion, even if it was originally a contribution. The five-year clock restarts with each conversion.

This matters if you have both a traditional IRA and a Roth IRA. If you convert $50,000 from your traditional IRA to your Roth, and you withdraw $50,000 from your Roth within five years, the IRS treats that as an early withdrawal of converted funds and charges the 10% penalty (unless you meet an exception). The pro-rata rule also applies: if you have pre-tax and after-tax money in your traditional IRA, a conversion pulls from both proportionally, which can create unexpected tax bills.

Frequently Asked Questions

Can I withdraw my contributions without reporting it to the IRS?

You do not have to report contributions on your tax return — they were already taxed when you earned them. Your bank or brokerage will send you a Form 1099-R if you withdraw money, but you will not owe tax on the contribution portion. You may need to file Form 8606 to show the IRS which part of your withdrawal was contributions versus earnings.

What if I need money but I am not sure if I am withdrawing contributions or earnings?

Contact your bank or brokerage and ask for a statement showing your total contributions and total account value. Subtract contributions from the value to find earnings. If you are unsure, withdraw only what you know is contributions. You can always withdraw more later once you have the exact numbers.

Does the five-year rule reset if I roll over my Roth IRA to a new bank?

No. The five-year clock is based on when you first contributed to any Roth IRA, not on which bank holds it. Moving your Roth from one institution to another does not restart the clock. A rollover (moving money between Roth IRAs) is different from a conversion (moving money from a traditional IRA to a Roth), which does have its own five-year rule.

If I am over 59½ but have not owned my Roth for five years, what do I owe?

You owe income tax on the earnings, but not the 10% penalty. The penalty is waived because you are over 59½. However, you still cannot withdraw earnings tax-free until the five-year rule is satisfied. You will report the taxable earnings on your tax return.

Can I withdraw earnings to pay off credit card debt?

Not without owing tax and penalty, unless you meet one of the narrow exceptions (disability, medical expenses over 7.5% of income, or first-time home purchase up to $10,000). Credit card debt does not may have access to. You can withdraw contributions anytime, but earnings are locked until 59½ and five years have passed.