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

A Roth IRA has two separate withdrawal rules: one for the money you put in (your contributions) and one for the money that grew inside the account (your earnings). You can pull out your contributions whenever you want without penalty or tax. Earnings are locked until age 59½ in most cases, and you must have held the account for at least five years. The five-year rule applies to your first Roth IRA contribution, not to each deposit you make.

The reason for this split is that you already paid income tax on contributions when you earned the money. The IRS lets you access that money freely. Earnings, by contrast, have never been taxed, so the IRS restricts them until you reach retirement age.

Key Takeaways

  • Contributions can be withdrawn at any time without tax or penalty, regardless of your age or how long you have held the account.
  • Earnings cannot be withdrawn before age 59½ without a 10 percent penalty and income tax, unless you meet a specific exception.
  • The five-year rule requires you to have owned a Roth IRA for at least five calendar years before you can withdraw earnings tax-free, even after age 59½.
  • Exceptions to the earnings penalty include first-time home purchase (up to $10,000 lifetime), disability, medical expenses, and a few other narrow situations.
  • If you convert a traditional IRA to a Roth, a separate five-year rule applies to the converted amount before you can withdraw it penalty-free.

How to tell contributions apart from earnings

Your brokerage or bank tracks this automatically on your Roth IRA statements. The account shows your total contributions separately from your earnings. When you request a withdrawal, you can specify whether you are taking contributions or earnings, or the institution may allow you to withdraw contributions first by default.

If you are unsure, ask your bank or brokerage directly. They can tell you your total contributions to date and your current earnings balance. This matters because if you accidentally withdraw earnings thinking they are contributions, you will owe tax and penalty on the amount you miscalculated.

Withdrawing contributions before retirement

Contributions come out tax-free and penalty-free at any age. You do not need to prove hardship, wait for a specific event, or meet any condition. If you contributed $5,000 per year for ten years, you can withdraw some or all of that $50,000 at age 30 with no tax bill and no 10 percent penalty.

The only limit is that you cannot put the money back and claim a new contribution for that year. If you withdraw $3,000 in contributions in 2024, that $3,000 does not free up new contribution room for 2024. Your annual contribution limit stays the same.

Withdrawing earnings before age 59½

Earnings withdrawn before age 59½ are subject to income tax plus a 10 percent early withdrawal penalty, unless you meet one of the IRS exceptions. The tax rate depends on your income bracket. The 10 percent penalty is calculated on the earnings amount only, not on your contributions.

The most common exceptions are first-time home purchase (up to $10,000 lifetime), disability, medical expenses over 7.5 percent of your adjusted gross income, and health insurance premiums while unemployed. A few other narrow situations exist, such as substantially equal periodic payments under a specific IRS formula, but these are rare and require careful calculation.

The five-year rule for earnings

Even if you reach age 59½, you cannot withdraw earnings tax-free unless you have owned a Roth IRA for at least five calendar years. The clock starts on January 1 of the year you made your first contribution to any Roth IRA. If you opened your first Roth IRA on December 15, 2023, the five-year period runs through December 31, 2027. On January 1, 2028, you can withdraw earnings tax-free (assuming you are also 59½ or meet an exception).

The five-year rule is per person, not per account. If you have multiple Roth IRAs, the five-year clock is the same for all of them. It is based on when you first contributed to any Roth IRA, not when you opened each individual account.

Conversions from traditional IRAs have their own five-year rule

If you convert money from a traditional IRA to a Roth IRA, that converted amount has a separate five-year waiting period before you can withdraw it penalty-free. This is different from the five-year rule for earnings. A conversion is treated as a new contribution for purposes of the five-year clock.

For example, if you convert $50,000 from a traditional IRA to a Roth in 2024, you cannot withdraw that $50,000 penalty-free until 2029, even if you are over 59½. However, any earnings that grow on top of the conversion can be withdrawn at 59½ after the main five-year rule is met. The rules are complex when you have both regular contributions and conversions, so ask your brokerage to clarify your specific situation.

What happens if you withdraw earnings early without an exception

You will owe income tax on the earnings at your marginal tax rate for that year, plus a 10 percent penalty. If you withdraw $5,000 in earnings and you are in the 22 percent tax bracket, you owe $1,100 in tax plus $500 in penalty, for a total of $1,600. The brokerage does not withhold this automatically, so you may owe it when you file your tax return.

Some people withdraw earnings early intentionally because they need the money and accept the tax cost. Others do it by mistake and then file an amended return to claim an exception they did not know about. If you are considering an early withdrawal, calculate the tax and penalty first so you know the true cost.

Frequently Asked Questions

Can I withdraw my contributions if I have not had the account for five years?

Yes. The five-year rule applies only to earnings. Contributions can be withdrawn at any time, regardless of how long you have owned the account. You do not owe tax or penalty on contributions at any age.

What counts as a first-time home buyer for the $10,000 exception?

The IRS defines it as someone who has not owned a home in the past two years. You can use the $10,000 exception once in your lifetime, and it applies to the purchase of a primary residence. The money must be used within 120 days of withdrawal.

If I have multiple Roth IRAs, do I have separate five-year clocks for each one?

No. The five-year rule is based on when you first contributed to any Roth IRA, not on each individual account. All your Roth IRAs share the same five-year clock. If your first Roth contribution was in 2020, all your Roth accounts can have earnings withdrawn tax-free starting in 2025 (assuming you are 59½ or meet an exception).

Do I have to withdraw money in a certain order—contributions first, then earnings?

You can specify the order when you request a withdrawal. Most institutions allow you to withdraw contributions first, which avoids tax and penalty. If you do not specify, ask your brokerage what their default order is before you withdraw.

What if I need money before 59½ and do not meet any exception?

You can withdraw your contributions without penalty. If you need more than your contributions, you can withdraw earnings but will owe income tax and a 10 percent penalty on that amount. Some people take a loan from their 401(k) instead if they have one, since loans do not trigger tax or penalty.