Roth IRA withdrawal rules: the two five-year clocks explained

A Roth IRA is the one retirement account where money can come out with no tax at all. But "tax-free" comes with conditions, and two different five-year clocks decide whether a withdrawal is free of tax, taxable, or hit with an extra 10% tax. People who have converted money from a traditional IRA, or who opened their first Roth late in their career, are the ones most likely to be caught out.

This guide lays out the rules from IRS Publication 590-B in the order they apply: qualified distributions, the order in which money comes out, the separate clock for each conversion, and what changes for someone who inherits a Roth IRA.

No required withdrawals for the original owner

If you are the original owner of a Roth IRA, Publication 590-B says you do not have to take distributions at any age. That is a big difference from a traditional IRA, where required minimum distributions start at 73. You decide if and when to take money out.

Rule 1: a qualified distribution is completely tax-free

A distribution is qualified, and so not included in your income at all, if it meets both tests:

1. It is made after the 5-year period beginning with the first tax year for which a contribution was made to any Roth IRA set up for you.
2. And it is made on or after the date you reach 59½, or because you are disabled, or to a beneficiary or your estate after your death, or for a first home (up to a $10,000 lifetime limit).

The five years start on January 1 of the first tax year you contributed for, not on the day you opened the account. So the clock can start earlier than you might think: a contribution made in early 2025 for tax year 2024 starts it on January 1, 2024.

When the first five-year clock ends

This clock is counted once, from your first Roth contribution. Opening a second Roth IRA later does not restart it.

Rule 2: your contributions can always come out tax-free

Even when a distribution is not qualified, Publication 590-B says you do not include in income distributions that are a return of your regular contributions. Only the earnings can be taxable. That is why the order in which money is treated as coming out matters.

The ordering rules

For a distribution that is not qualified, the IRS treats money as coming out in this order:

1. Regular contributions, the money you put in directly. Tax-free.
2. Conversion and rollover contributions, oldest year first. Within each, the part that was taxable when you converted comes out first, then any nontaxable part.
3. Earnings on all of it. This is the only part that can be taxable.

To apply the rules, you add together all distributions from all your Roth IRAs during the year, and all the contributions, as the publication's aggregation rules describe.

Rule 3: each conversion has its own five-year clock

If you convert money from a traditional IRA, or roll money from a workplace plan into a Roth IRA, a separate rule applies. If you take a distribution within the 5-year period starting with the first day of the tax year of the conversion, you may owe the 10% additional tax on early distributions on the part of the conversion you had to include in income.

• A separate 5-year period applies to each conversion and rollover.
• It is not necessarily the same as the 5-year period for qualified distributions.
• The IRS example: a conversion made on February 25, 2025 has a 5-year period that begins January 1, 2025.

This 10% tax is the additional tax on early distributions, so for most people it matters before 59½. It is one reason people near retirement look carefully at the timing of conversions.

Taking out a contribution in the same year

If you withdraw a contribution, and the earnings on it, by the due date of your return for that year (including extensions), the IRS treats the contribution as if you never made it. The contribution comes out tax-free, but the earnings are included in income for the year of the contribution.

If you inherit a Roth IRA

Beneficiaries follow different rules. The 10% additional tax does not apply to distributions made because of the owner's death. Earnings can still be taxable if the five-year period for a qualified distribution had not been met. And unlike the original owner, a beneficiary may have to take required distributions: if they are less than required, Publication 590-B says a 25% excise tax may apply. The guide to inherited IRAs explains the 10-year rule, and the inherited IRA calculator works out yearly amounts.

Putting money in: the 2027 limits

You can contribute up to $7,500 to IRAs for 2027, plus $1,100 if you are 50 or older, but how much can go into a Roth IRA phases out between $158,000 and $173,000 of income for single filers and between $250,000 and $260,000 for married couples filing jointly. The Roth IRA calculator applies the limits and shows what contributions can grow to.

Conversions and the rest of your return

The taxable part of a conversion is income in the year you convert. That can make more of your Social Security taxable, under the worksheet in IRS Publication 915, and it raises the modified adjusted gross income that sets Medicare premiums two years later. See how Social Security is taxed and the IRMAA guide before converting a large amount.

A quick checklist before a Roth withdrawal

1. Find the first tax year you contributed to any Roth IRA. Has the five-year period passed?
2. Are you 59½ or older (or does another exception apply)? If both answers are yes, the withdrawal is qualified and tax-free.
3. If not, add up your regular contributions: withdrawals up to that total are tax-free.
4. List each conversion by year. Is any still inside its own five-year period, and are you under 59½?
5. Keep records of contributions and conversions; the IRS rules depend on them.