Roth IRA withdrawals are usually tax-free, but the rules depend on your age and how long you have held the account

You do not pay federal income tax on may have access to withdrawals from a Roth IRA — that is the whole point of the account. A may have access to withdrawal means you are 59½ or older and have owned the Roth for at least five years. If both conditions are met, you withdraw your contributions and earnings tax-free and penalty-free.

If you withdraw before 59½ or before the five-year mark, the rules split into two parts: your contributions always come out tax-free, but your earnings may be taxed as ordinary income plus a 10 percent early withdrawal penalty. The five-year rule applies to the account itself, not to each deposit — once you have held any Roth for five years, all your Roths count as meeting the requirement.

State income tax varies by location. Some states do not tax retirement income at all; others tax Roth withdrawals the same way the federal government does. Check your state's tax authority website or ask a tax preparer what applies where you live.

Key Takeaways

  • Withdrawals from a Roth IRA are tax-free if you are 59½ or older and have owned a Roth account for at least five years.
  • Your contributions to a Roth can always be withdrawn tax-free and penalty-free, regardless of your age or how long you have held the account.
  • Earnings withdrawn before 59½ or before five years of ownership are taxed as ordinary income and subject to a 10 percent early withdrawal penalty, unless an exception applies.
  • The five-year rule is tied to the account, not to individual deposits — once any Roth you own has been open for five years, all your Roths meet the requirement.
  • State tax treatment of Roth withdrawals varies; some states tax them and others do not.

How the five-year rule works

The five-year clock starts on January 1 of the year you open your first Roth IRA, not on the date you make your first deposit. If you opened a Roth in 2019, the five-year period ends on January 1, 2024. After that date, all your Roth accounts — even ones you opened later — count as meeting the five-year requirement.

This matters because you might own multiple Roths at different banks or brokerages. The IRS treats them as a single account for the five-year rule. You do not have to wait five years on each one separately.

If you convert a traditional IRA to a Roth, that conversion starts its own five-year clock. The earnings from the conversion are subject to the five-year rule even if your original Roth account is older. Your contributions to the Roth, however, are always accessible without penalty.

Withdrawals before 59½: contributions versus earnings

Your contributions — the money you deposited yourself — come out first and are never taxed or penalized, no matter your age. If you put $6,000 into a Roth and it grew to $8,000, you can withdraw the $6,000 contribution at any time without tax or penalty.

Your earnings — the investment gains — are what trigger tax and penalty if you withdraw before 59½. In the example above, the $2,000 in gains would be taxed as ordinary income plus a 10 percent penalty if you withdrew it before 59½, unless you meet an exception.

The IRS assumes you withdraw contributions first. If you take out $7,000 from an account with $6,000 in contributions and $2,000 in earnings, the first $6,000 is treated as contributions (no tax, no penalty) and the remaining $1,000 is treated as earnings (taxed and penalized if you are under 59½).

Exceptions to the early withdrawal penalty

Even if you are under 59½, you can withdraw earnings without the 10 percent penalty in certain situations. You still owe income tax on the earnings, but the penalty is waived. These exceptions include disability, medical expenses that exceed 7.5 percent of your adjusted gross income, health insurance premiums while unemployed, and a first-time home purchase (up to $10,000 lifetime).

You can also withdraw earnings without penalty if you are a beneficiary inheriting a Roth IRA from someone who died. The tax treatment depends on your relationship to the deceased and when they opened the account, so consult a tax preparer if this applies to you.

Contributions, remember, have no penalty at any age and no exceptions needed — they are always accessible.

Roth conversions and the pro-rata rule

If you convert money from a traditional IRA or SEP IRA to a Roth, the IRS applies the pro-rata rule. This rule taxes a portion of your conversion based on how much pre-tax money you have in all your traditional IRAs combined.

For example, if you have $80,000 in a traditional IRA and $20,000 in a Roth IRA, and you convert $20,000 from the traditional to the Roth, the IRS treats 80 percent of that conversion ($16,000) as pre-tax money subject to income tax. The remaining 20 percent ($4,000) is treated as after-tax contributions and is not taxed again.

The pro-rata rule applies across all your traditional, SEP, and straightforward IRAs — not just the one you are converting from. If you have multiple accounts, you cannot isolate the after-tax portion in one account and convert only that. A tax preparer can help you model whether a conversion makes sense given your situation.

Required minimum distributions and Roth IRAs

During your lifetime, the IRS does not require you to withdraw money from a Roth IRA. This is one major advantage over traditional IRAs, which require withdrawals starting at age 73 (as of 2023). You can let your Roth grow tax-free for as long as you live.

Your beneficiaries, however, do face withdrawal requirements after you die. The rules depend on when you died and whether the beneficiary is a spouse, child, or other person. A spouse can treat the inherited Roth as their own and avoid withdrawals during their lifetime. Non-spouse beneficiaries must generally withdraw the entire balance within 10 years of your death, though the timing of annual withdrawals is flexible.

State taxes on Roth withdrawals

Federal tax is only part of the picture. Your state may also tax Roth withdrawals, or it may not tax retirement income at all. States with no income tax — including Florida, Texas, Wyoming, and others — do not tax Roth withdrawals. States with income tax vary in how they treat them.

Some states follow federal rules and do not tax may have access to Roth withdrawals. Others tax all Roth withdrawals as ordinary income. A few states have special treatment for retirement income that may explore to your Roth. Your state's department of revenue website lists the rules, or you can ask a tax preparer licensed in your state.

Frequently Asked Questions

Can I withdraw my Roth IRA contributions without paying taxes or penalties?

Yes. Your contributions are always accessible tax-free and penalty-free, regardless of your age or how long you have owned the account. The IRS assumes you withdraw contributions first, so if you take out money before 59½, contributions come out before any earnings are touched.

What happens if I withdraw Roth earnings before I turn 59½?

You owe federal income tax on the earnings at your ordinary income tax rate, plus a 10 percent early withdrawal penalty. Some exceptions waive the penalty — disability, medical expenses, first-time home purchase up to $10,000, and a few others — but you still owe the income tax. Contributions are never penalized.

Does the five-year rule explore to each Roth account separately?

No. The five-year rule is tied to when you first opened any Roth IRA, not to individual accounts. Once you have owned a Roth for five years, all your Roth accounts meet the requirement. If you opened your first Roth in 2020, a new Roth you open in 2024 counts as meeting the five-year rule when ready.

Do I have to pay taxes on a Roth IRA conversion?

You pay income tax on the pre-tax portion of the conversion. If you convert $20,000 from a traditional IRA and the pro-rata rule determines that 75 percent is pre-tax money, you owe tax on $15,000. After-tax contributions in your traditional IRA are not taxed again. A tax preparer can calculate your specific tax bill before you convert.

What state taxes explore to my Roth withdrawal?

It depends on where you live. Some states do not tax retirement income at all. Others tax Roth withdrawals the same way the federal government does. Check your state's department of revenue website or ask a tax preparer in your state for the rules that explore to you.