Roth IRA Withdrawal Rules

Some may be subject to taxes and penalties

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Aside from employer-sponsored retirement plans, individual retirement accounts (IRAs) are perhaps one of the best retirement savings tools available. IRAs provide tax-deferred growth on invested assets and many other benefits, depending on the type of IRA.

Deductible traditional IRAs offer tax deductions on contributions, as well as the tax-deferred growth that allows these accounts to take full advantage of compounding interest. Withdrawals from traditional IRAs are taxed as regular income, and the tax rates are based on your tax bracket for the year in which you make the withdrawal.

Roth IRAs, on the other hand, do not offer tax deductions on contributions, as contributions to the account must be after-tax. But in exchange, Roth IRA account owners are offered not only the same tax-deferred growth on their assets but also tax-free distributions and withdrawals.

Here's how Roth IRA withdrawals work, including some rules and regulations.

Key Takeaways

  • Roth IRAs offer tax-deferred growth on their assets and tax-free withdrawals if certain conditions are met.
  • You can withdraw your own contribution at any time without taxes or penalties, or any amount once you reach age 59 1/2 and have held the account for after five years.
  • The IRS carves out additional exceptions to taxation or penalties, but these are niche and subject to change, so consult the tax code for annual rules.
  • Roth IRA conversions follow a unique timeline and separate set of rules for taxation and penalties.

Tax-Free Qualified Roth IRA Withdrawals

Provided you have reached at least the age of 59 1/2 and have had your Roth IRA account open for at least five years, all of your Roth IRA withdrawal is tax-free. The IRS calls this a qualified distribution.

Additional Qualifying Criteria for Tax-Free Withdrawals

Though being under age 59 1/2 and meeting the five-year requirement is perhaps the most common combination of criteria for taking a qualified distribution from a Roth IRA, there are several other scenarios in which withdrawals are considered qualified and, therefore, are tax-free:

  • If you are disabled
  • If the withdrawal is paid out to your beneficiary or your estate after your death
  • If the withdrawal meets the IRS "first home" requirements (up to a $10,000 lifetime maximum)
  • If you were affected by a qualified disaster (available in certain years)


Such tax-free income in retirement is among the biggest benefits of a Roth IRA. Still, unlike traditional IRAs, you need not wait until retirement to withdraw your assets penalty and tax-free.

Exceptions to the Early Withdrawal Penalty

Some types of withdrawals, though not qualified distributions, are exceptions to the 10% early distribution penalty. Non-qualified distributions associated with these exceptions are penalty-free, but earnings remain taxable. Penalty-free exceptions include:

  • If the withdrawal is used to pay for health insurance while unemployed or if unreimbursed medical expenses that are more than 7.5% of your adjusted gross income for the year
  • If the distribution is made in substantially equal periodic payments

Tax-Free 'Return of Basis' Roth IRA Withdrawals

Since no Roth IRA contribution is ever tax deductible like a traditional IRA, most Roth IRA withdrawals will not be taxed. There is no tax due on any Roth IRA withdrawal if the total amount you withdraw is less than the amount you have previously contributed, no matter your age. For example, if, over several years, your annual contributions total $20,000 and you subsequently withdraw $5,000, none of your withdrawal will be taxable as it is considered a return of your original contribution.


In tax jargon, a withdrawal of previous contributions is considered a "return of basis."

That said, there are a few scenarios in which you may be assessed an early distribution tax as a penalty on a Roth IRA withdrawal.

Penalized Roth IRA Withdrawals

Using the same example scenario as above, if you were to withdraw more than the $20,000 you had already contributed to your Roth IRA, meaning that you were also withdrawing earnings prior to reaching age 59 1/2, part of your withdrawal would be subject to taxes and a 10% tax for early distributions. The same would be said for any Roth IRA withdrawals above your basis (contributions) within the first five years of contributing to the account. This rule is colloquially known as the five-year rule.


The Roth five-year rule is not as straightforward as you might think since satisfying the five-year rule can actually take less than five years, according to the IRS's definition.

To make matters more complicated, Roth IRA conversion assets follow their own separate timeline for the five-year rule. If Roth IRA funds are added via a Roth IRA conversion, these funds specifically must meet the five-year rule themselves. As such, if you convert a Roth IRA and then take some of those converted monies the next year, your withdrawal would be taxable.

The 10% Early Distribution Penalty

In addition to the regular income tax, a 10% early distribution penalty is generally assessed on distributions that are made if the account holder has not yet reached age 59 1/2.  However, the 10% early distribution penalty will only be assessed on withdrawals that are taxable. As such, any withdrawals that are returns of basis aren't subject to the early distribution penalty, even if the taxpayer is under 59 1/2.

Frequently Asked Questions (FAQs)

If I withdraw too much from my Roth IRA, can I put it back to avoid penalties?

The IRS allows a grace period of sorts for returning money to your Roth IRA if you have withdrawn too much. This situation is technically treated as a rollover, and you have 60 days to place these funds into a qualifying account to avoid penalties.

Can I withdraw funds from my Roth IRA for any reason even though I'm not 59 1/2?

You can always withdraw money from your Roth IRA without penalty, up to the amount you have already contributed. Anything you take out that exceeds the amount you have put in will be subject to taxation rules and a 10% penalty. Some reasons fall under exceptions, though, such as if you plan to use the funds for medical expenses or if you are a first-time homebuyer, to name a couple.

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  1. Internal Revenue Service. "Traditional and Roth IRAs."

  2. Internal Revenue Service. "Publication 590-B: Distributions From Individual Retirement Arrangements (IRAs)," Page 31.

  3. Internal Revenue Service. "Publication 590-B: Distributions From Individual Retirement Arrangements (IRAs)," Page 32.

  4. Internal Revenue Service. "Retirement Plan and IRA Required Minimum Distributions FAQs."

  5. Internal Revenue Service. "Publication 590-A (2021), Contributions to Individual Retirement Arrangements (IRAs)."

  6. Internal Revenue Service. "Publication 590-B: Distributions From Individual Retirement Arrangements (IRAs)," Pages 31-33.

  7. Internal Revenue Service. "Rollovers of Retirement Plan and IRA Distributions."

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