Roth IRA Withdrawal Rules: What’s Tax-Free and What’s Not

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A Roth IRA is one of the most powerful ways to build tax-free income for retirement, but understanding the Roth IRA withdrawal rules is what keeps those benefits intact. The short answer: you can withdraw your contributions at any time without taxes or penalties, but you’ll owe taxes — and possibly a 10% early withdrawal penalty — if you take out earnings too soon.

Knowing when and how you can withdraw from your Roth IRA can help you avoid unnecessary taxes and keep your retirement savings growing long-term.

Roth IRA 5-Year Rule & Withdrawal Order Chart (2025)

Roth IRA Withdrawal Basics

Not all Roth IRA money is treated the same. The IRS divides your account into three parts — contributions, earnings and conversions — and each has its own withdrawal rules.

Contributions, Earnings and Conversions

• Contributions: The money you’ve put in after taxes. Always tax and penalty-free to withdraw.
• Earnings: Growth from investments (like interest, dividends or capital gains). May face taxes or penalties if withdrawn too early.
• Conversions: Money moved from a traditional IRA to a Roth IRA. Each conversion has its own five-year holding period.

IRS Withdrawal Order

When you take money out of a Roth IRA, the IRS assumes this order:

1. Contributions (your own money first)
2. Conversions (oldest to newest)
3. Earnings (growth last)

That order works in your favor. It lets you access your tax-free contributions first, often avoiding early withdrawal penalties.

No Required Minimum Distributions (RMDs)

Unlike traditional IRAs, Roth IRAs don’t require withdrawals during your lifetime. That means your money can grow tax-free for decades or even be passed on to heirs tax-advantaged.

Did you know? In a 2025 study from the Investment Company Institute (ICI), 26.2% of U.S. households owned Roth IRAs as of mid-2024, and households that owned any type of IRA had a median balance of $130,000. That flexibility and tax-free growth make the Roth a favorite for long-term savers.

The Roth IRA 5-Year Rule Explained

To withdraw earnings tax-free, two conditions must be met:

1. You’re 59½ or older, and
2. You’ve had a Roth IRA open for at least five years.

This is called the 5-year rule, and it ensures your account has been established long enough for true “qualified” tax-free withdrawals.

How it works:

• The clock starts on January 1 of the year you make your first Roth contribution.
• Each conversion restarts its own 5-year clock.

Here is a breakdown of the demographics of Roth IRA owners, according to a 2022 ICI report based on 2020 data:

• Younger than 40: 34% of Roth IRA owners.
• Ages 40 to 59: 39% of Roth IRA owners.
• Ages 60 or older: 27% of Roth IRA owners. 

When You Can Withdraw Roth IRA Contributions

The best part of a Roth IRA? You can always withdraw your contributions — the money you personally deposited — at any time without taxes or penalties.

That flexibility makes a Roth IRA helpful for emergencies, though using it too soon can reduce long-term growth.

According to Fidelity, investors who leave contributions invested for at least 10 years earn an average 7% annualized return, showing why letting your money compound matters.

Roth IRA Earnings Withdrawals: When Taxes and Penalties Apply

Earnings withdrawals are tax-free only if you meet both conditions:

• You’re 59½ or older, and
• Your account has been open for at least five years.

If you withdraw earnings early, you’ll likely pay ordinary income tax plus a 10% penalty — unless you qualify for an exception.

Common taxable scenarios include:

• Withdrawing investment gains before 59½
• Taking earnings within five years of opening your first Roth IRA
• Pulling out converted funds before the 5-year conversion clock ends

Roth IRA Early Withdrawal Exceptions

You might be able to avoid the 10% early withdrawal penalty (though not always taxes) if your situation fits one of these exceptions:

• First-time home purchase: Up to $10,000 lifetime.
• Birth or adoption of a child: Up to $5,000 per parent.
• Qualified education expenses: For you, your spouse, kids or grandkids.
• Unreimbursed medical expenses: Over 7.5% of adjusted gross income (AGI).
• Health insurance while unemployed: After 12 consecutive weeks of unemployment benefits.
• Permanent disability or death of the owner.
• Substantially equal periodic payments (SEPPs): Withdrawals based on life expectancy.

Tip: Even when penalties don’t apply, earnings may still be taxable if the 5-year rule isn’t met. Always check your timeline.

Roth Conversion Withdrawal Rules

When you convert money from a traditional IRA to a Roth, that conversion amount starts a new 5-year clock. If you’re under 59½ and withdraw converted funds before the 5 years are up, you’ll owe the 10% early withdrawal penalty.

Each conversion is tracked separately, which can get complicated if you make annual conversions, so keep records or work with a tax professional.

Vanguard’s “How America Saves 2025” report, based on 2024 data, shows that the percentage of Vanguard-administered plans offering a Roth option increased by 45% over five years, from 74% in 2020 to 86% in 2024, as more savers look to lock in tax-free income later in life.

Real-Life Withdrawal Examples

Final Take to GO: Know the Roth IRA Withdrawal Rules Before You Tap Your Savings

A Roth IRA gives you unmatched flexibility, but only if you follow the Roth IRA withdrawal rules.

Contributions are always yours to take, but earnings and conversions come with waiting periods and IRS caveats.

Understanding the 5-year rule, age limits and exceptions can help you plan smarter withdrawals, avoid penalties and preserve your tax-free retirement growth.

Next steps:

• Use the GOBankingRates Retirement Calculator to estimate your Roth withdrawal timeline.
• Learn about Inherited Roth IRA rules.
• Find out how to max out a Roth IRA and keep your savings growing tax-free.

Melanie Grafil contributed to the reporting for this article.

Information is accurate as of Oct. 9, 2025.

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