sorbetto / Getty Images

Commitment to Our Readers

GOBankingRates' editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services - our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines and our products and services review methodology.

20 Years
Helping You Live Richer

Reviewed
by Experts

Trusted by
Millions of Readers

If you have a Roth IRA, understanding the Roth IRA 5-year rule is critical to avoiding taxes and penalties when you eventually withdraw your money. Simply put, this IRS rule sets the timing for when your Roth earnings can come out tax-free.

What trips people up is that there are two different 5-year rules — one for contributions and another for conversions. Knowing how both clocks work can help you keep more of your hard-earned retirement savings.

Roth IRA 5-Year Rule: Quick Guide

Two Separate Rules

• Contributions: One 5-year clock (starts Jan 1 of your first contribution year).
• Conversions: Each conversion gets its own 5-year clock.

Contribution Rule

• Applies only to earnings, not your original contributions.
• You must be 59½ + account open for 5 years to withdraw earnings tax-free.
• Contributions can be withdrawn anytime, tax and penalty-free.

Conversion Rule

• Each conversion has its own 5-year timer.
• Withdraw too early = 10% penalty on converted funds.
• Even if you’re over 59½, you still need to meet the 5-year rule.

What Happens If You Withdraw Early?

• 10% penalty on unqualified withdrawals.
• Tax treatment depends on the source:
  • Contributions: No taxes, no penalties.
  • Conversions: Tax already paid at conversion; 10% penalty if withdrawn early.
  • Earnings: Taxed as income + 10% penalty if under 59½ and before 5 years.

IRS Ordering Rules

Withdrawals are taken in this order:

1. Contributions
2. Conversions
3. Earnings

Inherited Roth IRAs

• Must follow the original owner’s 5-year clock.
• Non-spouse beneficiaries: Withdraw all funds within 10 years.
• If the account was open ≥5 years ??’ earnings = tax-free.

What Is the Roth IRA 5-Year Rule?

The IRS created the rule to prevent people from using Roth IRAs as short-term tax shelters. Without it, someone could contribute a large lump sum, then immediately withdraw earnings tax-free.

Here’s the key:

• The 5-year rule only applies to earnings and conversions.
• You can always withdraw your original contributions tax and penalty-free at any time.
• There are two clocks:
  • One for contributions.
  • One for each conversion.

Quick Answer: To take out Roth earnings tax-free, your account must be open at least 5 years and you must be age 59½ or older.

The 5-Year Rule for Roth Contributions

• Start date: The clock begins on January 1 of the year you make your first Roth contribution.
• Applies only to earnings: You can pull out your contributions anytime without tax or penalty.
• Age requirement: To withdraw earnings, you need to be 59½ and past the 5-year mark.

Example: If you open a Roth IRA at age 52 in 2025, your 5-year clock starts Jan. 1, 2025. You’ll meet the 5-year requirement in 2030, but you’ll also need to be 59½. That means your first tax-free earnings withdrawal would be in 2032.

Stat to know: About 48 million U.S. households own an IRA, and Roth IRAs are the fastest-growing type, according to the Investment Company Institute.

The 5-Year Rule for Roth Conversions

Conversions are trickier. Each conversion — from a 401(k), 403(b) or traditional IRA — gets its own 5-year clock.

• Separate clocks: If you do multiple conversions, each has its own start date.
• Penalty risk: If you pull out converted funds early, you’ll pay a 10% penalty even if you’re over 59½.
• Taxes at conversion: You pay income tax when converting, but if you withdraw too soon, penalties may still apply.

Example: You convert a $60,000 traditional IRA at age 60 in 2025. You’ll owe taxes that year, and you can’t touch the converted funds penalty-free until Jan. 1, 2030.

What Happens If You Withdraw Early?

Early withdrawals can be expensive.

• 10% penalty: Applies if you don’t meet the 5-year and age 59½ requirements.
• Taxes:
  • Contributions: Never taxed, never penalized.
  • Conversions: Taxed at conversion, penalty if withdrawn early.
  • Earnings: Taxed as income + 10% penalty if too early.

IRS ordering rules: Withdrawals always come out in this order — contributions first, conversions second, earnings last.

Stat to know: The IRS collected nearly $2 billion in early withdrawal penalties in 2022, showing how costly mistakes can be.

Inherited Roth IRA and the 5-Year Rule

If you inherit a Roth IRA, the rules depend on the original owner’s timeline.

• Original 5-year clock matters. If the Roth wasn’t open for 5 years, earnings may be taxable.
• 10-year rule for non-spouse heirs: Most beneficiaries must fully withdraw the account within 10 years of the original owner’s death.
• Spouse exception: Surviving spouses have more flexibility, including rolling it into their own Roth IRA.

Stat to know: According to Cerulli Associates, Americans are set to transfer $84 trillion in wealth by 2045, much of it through retirement accounts.

Roth IRA 5-Year Rule Timeline

Common Roth IRA Mistakes

• Confusing contribution vs. conversion clocks.
• Withdrawing earnings before age 59½ or 5 years.
• Ignoring inherited Roth timelines.
• Forgetting IRS withdrawal ordering rules.

Stat to know: Fidelity reports that the average IRA balance in 2023 was $116,600, a 12% increase from the prior year, showing why even small mistakes matter.

How To Avoid Penalties

• Track your first contribution year and each conversion year.
• Keep detailed statements from all custodians.
• Consult a tax professional before making large withdrawals.

Final Take to GO: Know the Rules, Maximize Your Roth

The Roth IRA 5-year rule is one of the most important rules to understand if you want to keep your retirement withdrawals tax-free. Remember: contributions are always safe to withdraw, but conversions and earnings come with waiting periods. By tracking your timelines and avoiding common mistakes, you can enjoy the full tax benefits of a Roth IRA.

Next step: Use this retirement calculator to see how your Roth savings could grow — and plan your first penalty-free withdrawal with confidence.

Information is accurate as of Oct. 2, 2025.

Share This Article: