You typically do not pay taxes when you withdraw money from a Roth IRA, but the rules depend on your age, how long you have held the account, and whether the money came from contributions or earnings

A Roth IRA is designed to let you withdraw your contributions tax-free at any time, without penalty. The earnings (investment gains) inside the account grow tax-free and can be withdrawn tax-free too — but only if you meet two conditions: you must be at least 59½ years old, and the account must have been open for at least five years. If you withdraw earnings before meeting both conditions, you owe income tax on those earnings plus a 10% penalty.

The five-year rule applies to your first Roth IRA contribution, not to each individual contribution. Once five years have passed since you opened your first Roth account, all your Roth accounts (if you have more than one) meet the five-year test. You do not pay taxes on contributions themselves at any age — only on earnings withdrawn early.

Key Takeaways

  • Contributions to a Roth IRA can be withdrawn at any age without taxes or penalties.
  • Earnings withdrawn before age 59½ or within five years of opening the account are taxed as income and subject to a 10% penalty.
  • The five-year rule is tied to your first Roth IRA, not to each separate contribution you make.
  • Certain hardships (disability, medical expenses, first-time home purchase) may let you withdraw earnings early without the 10% penalty, though income tax still applies.
  • After age 59½ and five years of account ownership, you can withdraw everything — contributions and earnings — without any tax or penalty.

How contributions and earnings are treated differently

The IRS tracks your Roth contributions separately from your earnings. When you withdraw money, contributions come out first. This means you can always pull out the money you put in without tax or penalty, regardless of your age or how long you have owned the account.

Earnings are the investment gains — the profit from stocks, bonds, or other holdings inside the account. These are taxed as ordinary income if withdrawn before age 59½ or before the account has been open five years. The 10% early withdrawal penalty applies on top of the income tax, making an early withdrawal of earnings costly.

If you have made contributions over multiple years, the IRS uses a "first in, first out" method: your earliest contributions are considered withdrawn first. This protects you from accidentally triggering taxes on earnings when you meant to withdraw only what you contributed.

The five-year rule and when it starts

The five-year clock begins on January 1 of the year you make your first contribution to any Roth IRA. If you opened a Roth in March 2020, the five-year period ends on January 1, 2025 — not five years later. This means you could be may be able to access to withdraw earnings tax-free as early as January 2025, even though only about four years and ten months have passed.

The rule applies to all your Roth accounts together, not individually. If you have a Roth IRA and a Roth 401(k), they share the same five-year clock. Once five years have passed since your first Roth contribution anywhere, both accounts meet the five-year test.

If you convert a traditional IRA to a Roth (called a Roth conversion), that conversion has its own five-year rule for the converted amount. Contributions you make directly to a Roth are not subject to this separate conversion rule — only conversions are. This can get complicated if you do both, so tracking your contributions and conversions separately is important.

Withdrawals before age 59½ with exceptions

Even if you have not reached 59½, you can withdraw earnings without the 10% penalty in a few specific situations. You still owe income tax on the earnings, but the penalty is waived. These exceptions include disability, medical expenses that exceed 7.5% of your adjusted gross income, health insurance premiums while unemployed, and a first-time home purchase (up to $10,000 lifetime).

A first-time home buyer is defined as someone who has not owned a home in the past two years. The $10,000 limit is a lifetime cap, not an annual one, so once you use it, you cannot use it again in future years. Other exceptions exist for education expenses and substantially equal periodic payments, though these have specific rules about how much you can withdraw each year.

Even with an exception, you must still meet the five-year rule to avoid the penalty. If you have owned your Roth for only two years and withdraw earnings for a first-time home purchase, you owe the 10% penalty because the five-year period has not passed, even though the home-purchase exception would normally waive it.

What happens at age 59½ and beyond

Once you reach 59½ and your Roth IRA has been open for at least five years, you can withdraw any amount — contributions or earnings — without taxes or penalties. There is no required minimum distribution from a Roth IRA during your lifetime, which means you can leave the money in the account to grow tax-free for as long as you want.

This is one of the major advantages of a Roth over a traditional IRA. With a traditional IRA, you must begin taking required minimum distributions at age 73 (as of 2023). A Roth has no such requirement, so you can use it as a long-term wealth-building tool without being forced to withdraw and pay taxes.

If you inherit a Roth IRA from someone else, the rules are different. Beneficiaries must withdraw the entire account within ten years (under current rules), though they do not owe income tax on the withdrawals if the original owner had met the age and five-year requirements.

Roth conversions and their separate five-year rule

If you convert money from a traditional IRA or 401(k) to a Roth, that converted amount has its own five-year waiting period before you can withdraw the earnings without penalty. The conversion itself is taxed in the year it happens — you owe income tax on the amount converted. After that, the earnings on the converted money are subject to the five-year rule.

Contributions you make directly to a Roth are not affected by conversion five-year rules. Only the converted portion has this separate clock. If you convert $50,000 and it grows to $55,000, the $5,000 in earnings cannot be withdrawn penalty-free until five years have passed since the conversion, even if your original Roth contributions met the five-year test years ago.

Many people use Roth conversions as a tax strategy, especially in years when their income is lower. Understanding the five-year rule for conversions helps you plan when you can access that money without penalties.

State taxes and Roth IRAs

Most states do not tax Roth IRA withdrawals, but a few do. Pennsylvania, New Jersey, and some others tax retirement account withdrawals under certain conditions. Check your state's tax rules or speak with a tax professional if you live in a state with income tax and are planning large Roth withdrawals.

Federal tax is the main concern for most people, but state tax can add a meaningful cost to early withdrawals of earnings. If you are considering a withdrawal before 59½, factor in both federal and state taxes when you calculate what the withdrawal will actually cost you.

Frequently Asked Questions

Can I withdraw my contributions without paying taxes?

Yes. You can withdraw contributions at any age without taxes or penalties. The IRS considers contributions to come out first when you withdraw, so you can always access the money you put in. Only earnings are subject to the age and five-year rules.

What if I withdraw earnings before five years but after age 59½?

You still owe income tax on the earnings, even though you have reached 59½. Both conditions must be met: you must be 59½ or older AND the account must have been open five years. If only one condition is met, the earnings are taxed and penalized.

Do I have to pay taxes on Roth IRA growth if I leave the money in the account?

No. As long as the money stays in the Roth IRA, you owe no taxes on the growth, no matter how much it increases. Taxes are only owed when you withdraw earnings before meeting the age and five-year requirements.

If I have multiple Roth IRAs, do they each have their own five-year rule?

No. All your Roth IRAs share the same five-year clock, which starts with your first Roth contribution. Once five years have passed since that first contribution, all your Roth accounts meet the five-year test.

What counts as a first-time home buyer for the Roth exception?

A first-time home buyer is someone who has not owned a home in the past two years. You can withdraw up to $10,000 in earnings penalty-free (though you still owe income tax) for a first home purchase. The $10,000 is a lifetime limit across all your Roth accounts.