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 age limit and no tax penalty. The earnings those contributions generate are different: you cannot touch them before age 59½ without paying income tax and a 10 percent penalty, with a few narrow exceptions. The account must also be open for at least five years before you can withdraw earnings tax-free, even after you turn 59½.

This five-year rule applies to each Roth IRA separately. If you open a second Roth IRA at a different bank, the five-year clock starts over for that account. The IRS counts the five years from January 1 of the year you made your first contribution to any Roth IRA, not from the date you opened the account.

Key Takeaways

  • You can withdraw your own contributions to a Roth IRA at any time without penalty or tax, regardless of your age.
  • Earnings in the account cannot be withdrawn before age 59½ without a 10 percent penalty and income tax, except in specific situations like disability or a first home purchase.
  • The account must be open for five tax years before you can withdraw earnings tax-free, even if you are over 59½.
  • The five-year rule resets if you open a new Roth IRA at a different financial institution.

How the five-year rule works

The five-year holding period is a calendar rule, not a rolling clock. The IRS counts from January 1 of the tax year in which you made your first contribution to any Roth IRA you own. If you contributed in December 2023, the five-year period began January 1, 2023. If you contributed in January 2024, the five-year period began January 1, 2024.

Once five tax years have passed, you can withdraw earnings without tax or penalty if you also meet one of these conditions: you are 59½ or older, you are disabled, you are a beneficiary receiving a distribution after the account holder's death, or you are using up to $10,000 for a first-time home purchase. If you do not meet one of these conditions, the earnings portion of your withdrawal is taxed as ordinary income plus the 10 percent penalty, even if the account is older than five years.

The five-year rule does not reset when you reach 59½. Once the five years are up, it stays up. If you opened your first Roth IRA in 2020 and you are now 62, you have already satisfied the five-year requirement and can withdraw earnings without penalty.

Withdrawing contributions versus earnings

The IRS treats contributions and earnings differently, and you need to know which is which. Your contribution is the money you deposited into the account yourself. Your earnings are the investment gains — dividends, interest, capital gains — that accumulated inside the account.

When you withdraw money, the IRS assumes you are taking out contributions first, up to the total amount you have contributed across all your Roth IRAs combined. Only after you have withdrawn all your contributions can you be said to be withdrawing earnings. This is called the "pro-rata rule," and it applies even if you have multiple Roth IRAs at different banks.

Example: You contributed $6,000 to a Roth IRA in 2022 and $6,000 in 2023, for a total of $12,000 in contributions. The account is now worth $15,000 because of investment gains. If you withdraw $10,000 today, all $10,000 is treated as a contribution withdrawal and comes out tax-free and penalty-free. The remaining $5,000 in the account includes $2,000 in contributions and $3,000 in earnings.

Exceptions to the 10 percent penalty

Even if your account is under five years old or you are under 59½, you can withdraw earnings without the 10 percent penalty in these situations: you are disabled, you are a beneficiary of a deceased account holder, you are using the money for a first-time home purchase (up to $10,000 lifetime), or you are taking substantially equal periodic payments under IRS Rule 72(t). You still owe income tax on the earnings in all these cases — the penalty is waived, but the tax is not.

Disability means you cannot work because of a physical or mental condition expected to last at least 12 months or result in death. You will need medical documentation. The first-time home purchase exception applies if you have not owned a home in the past two years; you can use up to $10,000 total across your lifetime, and it must be for your own home, a spouse's home, a parent's home, or a child's home.

The substantially equal periodic payments exception is complex and involves calculating a specific withdrawal amount each year based on your life expectancy. This route requires IRS Form 72(t) calculations and is usually only worth pursuing if you need ongoing access to a large portion of the account.

What happens at age 59½

Once you turn 59½, you can withdraw earnings without the 10 percent penalty — but only if the account has been open for five tax years. If both conditions are met, withdrawals are tax-free. If the account is less than five years old, you owe income tax on the earnings portion even though the penalty is waived.

There is no requirement to withdraw money at 59½ or at any later age. Unlike a traditional IRA, a Roth IRA has no required minimum distributions during your lifetime. You can leave the money in the account to grow for as long as you live, and your beneficiaries inherit it tax-free.

Withdrawals for specific purposes

Beyond the exceptions listed above, you can withdraw up to $10,000 in earnings for a first-time home purchase without the 10 percent penalty. This is a one-time lifetime limit across all your Roth IRAs. The money must be used within 120 days of withdrawal, and "first-time homebuyer" means you have not owned a principal residence in the two years before the purchase.

You cannot withdraw earnings for education expenses, medical bills, or other hardships without paying both the 10 percent penalty and income tax, unless you fall into one of the narrow exceptions above. A traditional IRA allows penalty-free withdrawals for education and medical costs; a Roth IRA does not.

Frequently Asked Questions

Can I withdraw my contributions before age 59½?

Yes. You can withdraw the money you contributed to your Roth IRA at any time, at any age, without penalty or tax. Only the earnings portion is restricted. Keep records of how much you have contributed so you can prove it to the IRS if needed.

What if I withdraw earnings before five years and before age 59½?

You owe income tax on the earnings at your ordinary tax rate, plus a 10 percent penalty. The only way to avoid the penalty is to fall into one of the narrow exceptions: disability, death, first-time home purchase, or substantially equal periodic payments.

Do I have to withdraw money from my Roth IRA at any age?

No. A Roth IRA has no required minimum distributions during your lifetime. You can leave the money untouched for as long as you live. Your beneficiaries will inherit it tax-free if the five-year rule has been satisfied.

If I have two Roth IRAs, do they share the same five-year rule?

No. Each Roth IRA has its own five-year clock starting from January 1 of the year you made your first contribution to that specific account. However, when you withdraw, the IRS treats all your Roth IRAs as one pool for the purpose of calculating how much is contributions versus earnings.

Can I withdraw earnings for medical bills or education without penalty?

No. A Roth IRA does not allow penalty-free withdrawals for medical or education expenses the way a traditional IRA does. You can withdraw contributions anytime, but earnings are locked until 59½ unless you meet one of the four narrow exceptions.