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

A Roth IRA lets you pull out the money you put in — your contributions — at any age without penalty or taxes. 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 account must also have been open for at least five tax years before you can withdraw earnings tax-free, even at 59½.

This five-year rule applies to each Roth IRA you own separately. If you convert a traditional IRA to a Roth, that conversion starts its own five-year clock. The rule is about the account's age, not your age.

Key Takeaways

  • You can withdraw contributions (the money you deposited) from a Roth IRA at any time without taxes or penalties, regardless of your age.
  • Withdrawing earnings before age 59½ costs you income tax on the earnings plus a 10% penalty, unless a narrow exception applies.
  • The Roth IRA must be open for at least five tax years before you can withdraw earnings tax-free, even if you are over 59½.
  • Exceptions to the 10% penalty include first-time home purchase (up to $10,000 lifetime), disability, medical expenses, and a few other specific situations.
  • If you cannot tell which part of your withdrawal is contributions versus earnings, the IRS has a formula that determines the taxable portion.

How the IRS tells contributions apart from earnings

When you withdraw money, the IRS does not let you choose which part comes out first. Instead, it uses a pro-rata rule: your withdrawal is treated as a proportional mix of contributions and earnings based on your total Roth balance across all your Roth IRAs.

Example: You have $50,000 in contributions and $20,000 in earnings across all your Roth accounts, for a total of $70,000. If you withdraw $7,000, the IRS treats it as 71% contributions ($5,000) and 29% earnings ($2,000). You owe tax and penalty only on the $2,000 earnings portion.

This rule applies even if you have multiple Roth IRAs at different banks. The IRS counts them together. Conversions from traditional IRAs are tracked separately for the five-year rule, but they still count toward the pro-rata calculation if you withdraw.

Withdrawals before age 59½ with no penalty

The IRS allows you to withdraw earnings without the 10% penalty in these situations:

  • First-time home purchase: Up to $10,000 lifetime from your own Roth IRA (not a spouse's). You must not have owned a home in the past two years. You still owe income tax on the earnings.
  • Disability: You are unable to work due to a physical or mental condition expected to last indefinitely or result in death. No income tax on earnings if the account is five years old.
  • Medical expenses: Unreimbursed medical costs that exceed 7.5% of your adjusted gross income. You still owe income tax on the earnings.
  • Health insurance premiums while unemployed: You lost your job and are collecting unemployment benefits. You still owe income tax on the earnings.
  • Substantially equal periodic payments (SEPP): You withdraw a fixed amount each year based on your life expectancy. This is complex and requires IRS approval of your calculation method.

These exceptions waive the 10% penalty but do not waive income tax on earnings (except disability and death, if the five-year rule is met). You still report the taxable earnings on your tax return.

The five-year rule for earnings

Even if you meet an exception to the 10% penalty, you cannot withdraw earnings tax-free until the Roth IRA has been open for five tax years. The five-year period starts on January 1 of the year you open the account or make a conversion.

If you opened a Roth IRA in 2020, the five-year period ends on December 31, 2024. Starting January 1, 2025, you can withdraw earnings tax-free if you also meet an exception (like disability) or reach age 59½.

Conversions from traditional IRAs have their own five-year clock. If you convert in 2023, that conversion's five-year period ends in 2027. If you withdraw that converted money before 2028, you owe a 10% penalty on the conversion amount (not the earnings it generated), unless an exception applies.

What happens if you withdraw before the five-year rule is met

If you withdraw earnings before the account is five years old, you owe income tax on those earnings plus a 10% penalty — even if you are over 59½ or meet an exception. The five-year rule overrides everything else.

The only partial exception is disability or death: if you are disabled or the withdrawal is to a beneficiary after your death, the 10% penalty is waived, but you still owe income tax on the earnings.

Roth conversions and the pro-rata rule

If you convert a traditional IRA to a Roth, the conversion amount counts toward your pro-rata calculation if you later withdraw from any Roth IRA. This can create an unexpected tax bill.

Example: You have $100,000 in a traditional IRA (pre-tax money) and $50,000 in a Roth IRA (contributions only). You convert the entire traditional IRA to a Roth. Now your total Roth balance is $150,000, of which $100,000 is the conversion (treated as earnings for withdrawal purposes) and $50,000 is contributions. If you withdraw $30,000 the next year, two-thirds of it ($20,000) is treated as the conversion and taxed as income, plus a 10% penalty if you are under 59½.

This is called the backdoor Roth trap. It affects people who convert traditional IRAs while also holding Roth IRAs. The solution is to move or empty any traditional IRAs before converting, or to avoid withdrawals from Roth accounts for several years after a conversion.

Withdrawals after age 59½

Once you turn 59½ and the account is five years old, you can withdraw contributions and earnings tax-free and penalty-free. There is no required withdrawal age for Roth IRAs during your lifetime — unlike traditional IRAs, which require withdrawals starting at age 73 (as of 2023).

You do not have to take money out. You can leave it untouched for decades if you want. Beneficiaries who inherit a Roth IRA have different rules and must begin withdrawals within ten years of your death (under current law).

Frequently Asked Questions

Can I withdraw my contributions without paying taxes?

Yes. Contributions are money you deposited yourself, and you can withdraw them at any age without taxes or penalties. The tricky part is that the IRS uses the pro-rata rule, so if you have earnings in the account, part of your withdrawal is treated as earnings and taxed.

What if I need money before age 59½ but do not meet an exception?

You can withdraw contributions without penalty. If you must withdraw earnings, you will owe income tax plus a 10% penalty on the earnings portion. Some people use this as a last resort, though it defeats the purpose of saving for retirement.

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

No. The five-year rule is based on when you first opened any Roth IRA, not on individual accounts. If your first Roth was opened in 2020, all your Roth IRAs meet the five-year test on January 1, 2025, regardless of when you opened the others.

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

First-time means you have not owned a home in the past two years. You can use the $10,000 for a down payment, closing costs, or construction of a new home. The $10,000 is a lifetime limit per person, not per year.

If I am disabled, do I owe taxes on earnings I withdraw?

You do not owe the 10% penalty, but you do owe income tax on the earnings if the account is less than five years old. If the account is five years old or older, you owe neither tax nor penalty on earnings.