When You Can Withdraw From a Roth IRA Without Penalty

The basic rule: contributions come out free, earnings do not

You can withdraw the money you contributed to a Roth IRA at any time, in any amount, with no penalty. The IRS does not tax or penalize you on those contributions when you take them out—you already paid income tax on that money when you earned it.

Earnings (the investment gains your money made inside the account) are different. If you withdraw earnings before age 59½ and before your account has been open for five tax years, you owe a 10% early withdrawal penalty on those earnings plus income tax on them. The five-year rule applies to each Roth IRA separately, starting from January 1 of the year you made your first contribution to that specific account.

The distinction matters because many people fund a Roth with a conversion from a traditional IRA or 401(k), and conversions create a separate five-year clock. A contribution you made directly and a conversion you made in the same year are not the same thing for penalty purposes.

Key Takeaways

• Contributions to a Roth IRA can be withdrawn at any age without penalty or tax, because you already paid tax on that money when you earned it.
• Earnings withdrawn before age 59½ trigger a 10% penalty plus income tax, unless an exception applies or the account has been open for five tax years.
• The five-year rule starts over for each Roth account and for conversions, so a conversion you made in 2024 has its own five-year clock separate from your direct contributions.
• Several exceptions allow penalty-free withdrawal of earnings: first-time home purchase (up to $10,000 lifetime), disability, medical expenses over 7.5% of income, and a few others.
• Roth conversions have a separate penalty rule: converted amounts can be withdrawn penalty-free after five years, but earnings on those conversions still follow the age 59½ rule.

How to tell contributions apart from earnings

The IRS tracks three separate buckets inside your Roth IRA: direct contributions, conversion amounts, and earnings. When you withdraw money, the IRS assumes you take it out in this order: contributions first, then conversions, then earnings. This is called the "ordering rule," and it works in your favor because contributions come out tax-free and penalty-free.

Your Roth IRA custodian (the bank, brokerage, or investment firm holding the account) reports your contributions and conversions on Form 5498, which you receive each year. Keep these forms. If you ever need to prove how much you contributed versus how much you earned, the IRS will ask for them. If you cannot show the breakdown, the IRS may assume more of your withdrawal was earnings than it actually was.

If you have multiple Roth IRAs, the ordering rule applies across all of them combined, not to each account separately. If you have $50,000 in contributions spread across three Roth accounts and you withdraw $30,000 from one account, the IRS treats that $30,000 as coming from your total contribution pool, not just from that one account.

The five-year rule for direct contributions and conversions

Even though you can withdraw contributions anytime, a five-year holding period applies to the account itself. This matters only if you withdraw earnings. If your Roth IRA has been open for fewer than five tax years and you withdraw earnings, you owe the 10% penalty on those earnings—even if you are over 59½.

The five-year period starts on January 1 of the year you made your first contribution to that Roth IRA. If you opened a Roth in March 2024 and made your first contribution then, your five-year clock started January 1, 2024. By January 1, 2029, the five-year requirement is satisfied, and you can withdraw earnings penalty-free (though you still owe income tax on them unless an exception applies).

Conversions have their own five-year rule. If you convert money from a traditional IRA to a Roth in 2024, you can withdraw that converted amount penalty-free after five years (by 2029), but earnings on that conversion still cannot be withdrawn penalty-free until you are 59½. This creates a situation where you might withdraw the conversion itself penalty-free but still owe a penalty on the earnings it generated.

Exceptions that allow penalty-free withdrawal of earnings

The IRS allows you to withdraw earnings penalty-free (though you still owe income tax) in these situations: you are disabled, you are withdrawing for a first-time home purchase (up to $10,000 lifetime limit), you have unreimbursed medical expenses over 7.5% of your adjusted gross income, you are paying health insurance premiums while unemployed, or you are taking substantially equal periodic payments under IRS Rule 72(t).

The first-time home purchase exception is often misunderstood. "First-time" means you have not owned a home in the past two years. The $10,000 limit is per person, per lifetime—not per year or per account. If you are married and both spouses have Roth IRAs, each can withdraw up to $10,000, for a household total of $20,000. Once you use the $10,000, you cannot use it again, even decades later.

Disability and medical expense exceptions require documentation. For disability, you need proof from the Social Security Administration or Railroad Retirement Board that you are disabled. For medical expenses, you need receipts and a calculation showing the expenses exceeded 7.5% of your adjusted gross income for that year. The IRS does not pre-approve these withdrawals; you claim the exception when you file your tax return, and the burden is on you to prove it if audited.

What happens if you withdraw earnings before the five-year mark

If you withdraw earnings before your Roth has been open for five tax years and no exception applies, you owe two things: income tax on the earnings at your ordinary income tax rate, and a 10% penalty on the earnings. The penalty is calculated on the earnings amount only, not on your entire withdrawal.

Example: You opened a Roth IRA in 2024 and contributed $7,000. By 2025, the account grew to $8,500 (a $1,500 gain). If you withdraw $8,500 in 2025 and no exception applies, you owe income tax on the $1,500 earnings plus a $150 penalty (10% of $1,500). The $7,000 contribution comes out tax-free and penalty-free.

Your custodian does not automatically withhold the tax or penalty. You owe it when you file your tax return. If you do not pay it, the IRS will add interest and may pursue collection. The penalty is reported on Form 5329, which you file with your tax return if you took an early withdrawal.

Roth conversions and the pro-rata rule

If you have both a Roth IRA and a traditional IRA, SEP IRA, or SIMPLE IRA, conversions trigger the pro-rata rule. This rule says that when you convert part of your pre-tax IRA money to a Roth, the IRS treats the conversion as coming proportionally from your pre-tax and after-tax balances across all IRAs combined.

Example: You have a traditional IRA with $90,000 in pre-tax contributions and $10,000 in after-tax contributions (total $100,000). You convert $50,000 to a Roth. The IRS treats the conversion as 90% pre-tax ($45,000) and 10% after-tax ($5,000). You owe income tax on the $45,000 pre-tax portion. The $5,000 after-tax portion is not taxed again.

This rule applies even if you have a separate Roth IRA already. All IRAs are aggregated for the pro-rata calculation. If you want to avoid the pro-rata rule, you must move or roll over any traditional, SEP, or SIMPLE IRAs into an employer 401(k) plan (if your employer allows it) before doing a conversion. Once those pre-tax IRAs are out of the IRA system, they no longer count in the pro-rata calculation.

Withdrawals after age 59½ and the five-year rule

Once you reach 59½, you can withdraw earnings penalty-free—but only if your Roth has been open for five tax years. If you opened your first Roth at age 58 and turned 59½ before the five-year mark, you still owe the 10% penalty on earnings, even though you are over 59½.

After both conditions are met (age 59½ and five tax years), you can withdraw earnings without penalty. You still owe income tax on the earnings, but the 10% penalty does not apply. Contributions continue to come out tax-free and penalty-free at any age.

This is one reason people sometimes open a Roth IRA years before they plan to retire: it lets the five-year clock run while they are still working, so that by the time they retire and need the money, both the age and time requirements are satisfied.

Frequently Asked Questions

Can I withdraw my contributions without reporting it to the IRS?

You do not owe tax on contributions, but you should still report the withdrawal on your tax return if you took a distribution from the Roth. Your custodian reports the total distribution to the IRS on Form 1099-R. If you do not report it, the IRS may assume the entire amount was earnings and assess tax and penalty. Keep your contribution records to prove how much was contributions versus earnings.

What if I need money from my Roth before five years but I am over 59½?

You can withdraw contributions penalty-free at any age. If you need earnings and you are over 59½ but the account is less than five years old, you owe the 10% penalty on the earnings portion, even though you are past the age threshold. The five-year rule does not have an age exception.

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

No. The five-year rule applies to your first Roth IRA contribution across all Roth accounts combined. If you opened one Roth in 2024 and another in 2025, both are measured from the 2024 date. However, conversions have their own separate five-year clock starting from the year of conversion.

If I convert a traditional IRA to a Roth, can I withdraw the converted amount right away?

You can withdraw the converted amount after five years without penalty. However, you owe income tax on the conversion in the year you make it. Earnings on the converted money still cannot be withdrawn penalty-free until you are 59½, even after five years have passed.

What counts as a "first-time home purchase" for the $10,000 exception?

First-time means you have not owned a principal residence in the past two years. You can use the $10,000 for your own home purchase, or to help a spouse, child, grandchild, or parent buy their first home. The $10,000 is a lifetime limit per person, not per year or per account.