The basic rule: most Roth withdrawals are tax-free

Most money you take out of a Roth IRA comes out tax-free. That is the whole point of a Roth — you pay taxes on the money going in, and then the growth and withdrawals are yours to keep without the IRS taking a cut.

But there is a catch. The tax-free treatment only applies if you meet two conditions: you must be at least 59½ years old, and your Roth account must have been open for at least five tax years. If either condition is not met, you may owe taxes and penalties on the earnings portion of what you withdraw.

The money you contributed directly to the Roth — your own deposits — always comes out tax-free, no matter your age or how long the account has been open. It is only the earnings (the growth your money made inside the account) that can trigger taxes.

Key Takeaways

  • Contributions you made yourself always come out tax-free at any age, but earnings are taxable if you withdraw before 59½ or within five tax years of opening the account.
  • The five-year rule counts from January 1 of the year you first opened any Roth IRA, not from the date you opened your current account.
  • Early withdrawal of earnings before 59½ triggers a 10% penalty plus income tax, unless you may have access to for a narrow exception like disability or a first-home purchase.
  • Roth conversions have their own five-year rule: money converted from a traditional IRA is subject to a separate five-year waiting period before you can withdraw it penalty-free.
  • If you inherit a Roth IRA, different rules explore, and you should check the account documents or speak with the financial institution holding it.

How to tell contributions from earnings

Your Roth IRA statement shows your contribution history. The contributions are the dollars you put in yourself. The earnings are everything else — the investment gains, dividends, and interest that accumulated inside the account.

When you withdraw money, the IRS treats it as coming out in a specific order: contributions first, then conversions, then earnings last. This matters because it means you can usually pull out your contributions without any tax or penalty, even if you are under 59½.

If you have made multiple contributions over the years, add them all up. That total is what you can withdraw tax-free at any time. Anything beyond that number is earnings, and earnings withdrawals before 59½ or within the first five years trigger taxes and penalties.

The five-year rule and when it starts

The five-year clock starts on January 1 of the tax year you first opened a Roth IRA — any Roth IRA. If you opened your first Roth in 2020, the five-year period ends on January 1, 2025. If you opened it in 2024, it ends on January 1, 2029.

This matters if you have multiple Roth accounts. You do not have a separate five-year clock for each account. The clock is tied to you, not to the account. If you opened a Roth in 2020 and opened another one in 2023, both accounts satisfy the five-year rule on January 1, 2025.

The five-year rule applies separately to conversions. If you convert money from a traditional IRA to a Roth, that converted money has its own five-year waiting period before you can withdraw it penalty-free. A conversion in 2024 cannot be withdrawn without penalty until 2029, even if your original Roth account opened in 2020.

What happens if you withdraw earnings early

If you withdraw earnings before you turn 59½ and before five tax years have passed, you owe income tax on those earnings at your regular tax rate. You also owe a 10% early withdrawal penalty on top of the income tax.

The penalty is calculated on the earnings amount only, not on your contributions. If you withdraw $5,000 in earnings before 59½, you pay 10% of $5,000 ($500) as a penalty, plus income tax on the full $5,000 at your tax bracket.

Some situations let you avoid the 10% penalty even if you withdraw early. These include disability, medical expenses above 7.5% of your adjusted gross income, a first-time home purchase (up to $10,000 lifetime), and a few others. You still owe income tax on the earnings, but the penalty is waived. The IRS Form 5329 is where you report the exception.

Withdrawals after 59½ and five years have passed

Once you reach 59½ and your Roth has been open for five tax years, all withdrawals are tax-free — both contributions and earnings. You can withdraw as much as you want, whenever you want, and owe nothing to the IRS.

There is no required minimum distribution from a Roth IRA during your lifetime. Unlike a traditional IRA, which forces you to start taking money out at age 73, a Roth lets you leave the money alone as long as you live. This makes a Roth useful if you do not need the money and want to leave it to heirs.

Inherited Roth IRAs and their tax treatment

If you inherit a Roth IRA from someone else, the tax rules depend on who left it to you and when they opened the account. A spouse can treat an inherited Roth as their own and follow the normal rules. A non-spouse beneficiary must follow different withdrawal rules that vary by state and by when the original account owner died.

In most cases, inherited Roth distributions are tax-free to the beneficiary, but you may be required to withdraw the money on a schedule rather than all at once. The account documents or the financial institution holding the Roth can tell you what the rules are for your specific situation.

How to report Roth withdrawals on your tax return

If all your Roth withdrawals are contributions (not earnings) and you are over 59½, you do not report the withdrawal on your tax return at all. It is not income.

If you withdraw earnings before 59½ or before five years have passed, you report the taxable portion on Form 1040 as income. If you owe the 10% penalty, you report that on Form 5329. Your Roth custodian (the bank or brokerage holding the account) will send you a Form 1099-R showing the withdrawal amount, and you use that to fill out your return.

If you are unsure whether your withdrawal is taxable, the custodian can tell you how much is contributions versus earnings. Ask them before you withdraw, or ask them to calculate it when you file your return.

Frequently Asked Questions

Can I withdraw my contributions without paying taxes or penalties?

Yes. Contributions you made yourself can be withdrawn at any age, tax-free and penalty-free. Only earnings are subject to the age and five-year rules. Your account statement shows how much you have contributed over time.

What if I withdraw earnings but I am disabled?

If you are disabled, you can withdraw earnings before 59½ without the 10% penalty, but you still owe income tax on the earnings. Disability is one of the narrow exceptions to the early withdrawal penalty. You report the exception on Form 5329 when you file your return.

Does the five-year rule reset if I open a new Roth account?

No. The five-year clock is tied to you, not to individual accounts. If you opened your first Roth in 2020, all your Roth accounts satisfy the five-year rule on January 1, 2025, even if you opened a second account in 2024.

What is the difference between the five-year rule and the age requirement?

You need both conditions met to withdraw earnings tax-free: you must be 59½ or older, and your Roth must have been open for five tax years. If you meet only one condition, earnings withdrawals are taxable and subject to the 10% penalty (unless an exception applies).

Do I have to report a Roth withdrawal on my tax return?

Only if the withdrawal includes taxable earnings. If you withdraw only contributions, or if you are over 59½ and five years have passed, there is nothing to report. If you withdraw taxable earnings, your Roth custodian sends you Form 1099-R, and you report the taxable amount on your return.