Roth IRA Withdrawal: Tax Rules, Penalties, and Exceptions

Roth IRA withdrawal rules split cleanly along one line: the money you put in comes back to you anytime, tax-free and penalty-free, while the growth on that money only comes out clean after you turn 59½ and have held a Roth IRA for at least five tax years. Miss either condition on the earnings side and the IRS treats that portion as ordinary income and tacks on a 10% penalty, unless one of a specific list of exceptions applies.

The Order Dollars Leave Your Account

The IRS doesn’t let you pick which money you’re withdrawing. Every distribution comes out in a fixed sequence:

Regular contributions leave first. You already paid tax on them, so they come out with no tax and no penalty.
Converted and rolled-over amounts leave second, oldest conversion first. Within each conversion, the taxable portion comes out before the nontaxable portion.
Earnings leave last. This is the only layer that can produce tax or penalties.

The sequence works in your favor. An account with $50,000 in contributions, $20,000 in conversions, and $15,000 in earnings would need to release more than $70,000 before touching a taxable dollar.¹ Plenty of people who take money out early never reach the earnings layer at all.

Taking Out Your Contributions

Every dollar you contributed directly to a Roth IRA can come back to you whenever you want, with no tax and no penalty. No age threshold, no waiting period. The money went in after tax, so the IRS doesn’t tax it again.²

The one thing you owe yourself is a running total. You have to be able to prove that a withdrawal falls within what you contributed. If you’ve put in $40,000 across all your Roth IRAs and you take out $40,000 or less, the whole withdrawal is tax-free. Beyond that number, you’ve moved into conversions or earnings, where different rules take over.

When Earnings Come Out Tax-Free

Growth in a Roth IRA becomes fully tax-free when the withdrawal qualifies as a “qualified distribution.” Two conditions have to be met at the same time:

You are at least 59½ at the time of the distribution. Being disabled, taking the withdrawal after the account owner’s death, or using up to $10,000 lifetime for a first-time home purchase also satisfies this leg.
At least five full tax years have passed since January 1 of the year of your first contribution to any Roth IRA.

Both boxes have to be checked. Being 65 doesn’t help if your first Roth is three years old, and a 20-year-old Roth doesn’t help if you’re 45.³

How the Five-Year Clock Starts

The clock starts on January 1 of the tax year for which you make your first-ever Roth contribution. A useful quirk sits inside that rule. If you contribute in April 2026 and designate the deposit for the 2025 tax year (which the IRS allows until the filing deadline), the clock begins on January 1, 2025, and the five-year period ends on January 1, 2030.¹

The clock is personal and permanent. Once it starts, it covers every Roth IRA you’ll ever own. Opening a second Roth later doesn’t restart it. First contribution in 2020? You cleared the five-year window in 2025.

What It Costs When a Withdrawal Doesn’t Qualify

Pull earnings before meeting both conditions and the IRS treats those earnings as ordinary income, added to your taxable income for the year and taxed at your marginal rate.⁴ On top of that, a 10% additional tax applies as a penalty for the early withdrawal.⁵

In the 22% bracket, a $10,000 earnings withdrawal costs about $2,200 in income tax plus a $1,000 penalty. That combined 32% hit is the point of the rule. Some of the exceptions below can knock out the 10% penalty, but the income tax portion still applies.

Conversions Have Their Own Five-Year Clock

Money you converted from a traditional IRA or rolled over from a 401(k) plays by its own rules, and this catches people who use conversions strategically. Each conversion carries a separate five-year holding period, starting January 1 of the year of that conversion.³

If you’re under 59½ and take out converted amounts within that five-year window, the 10% early withdrawal penalty applies to the taxable portion of the conversion (the amount you had to include in income when you did the conversion). Once you hit 59½, the penalty on converted funds disappears regardless of when the conversion happened.¹

The ordering rules matter here. Conversions come out oldest first. A conversion from 2021 and another from 2024 would get tapped in that order. The 2021 conversion is past its five-year window by 2026, so no penalty applies to those dollars even if you’re under 59½. The 2024 conversion, still inside its window, would be penalized.

Ways to Skip the 10% Penalty

Several situations waive the 10% penalty on earnings or conversion amounts even when the withdrawal isn’t a qualified distribution. Important distinction: the penalty goes away, but income tax on the earnings portion still applies unless the withdrawal separately meets the age-and-five-year test.

Long-Standing Exceptions

Total and permanent disability, as the IRS defines it.⁵
First-time home purchase, up to $10,000 in earnings over your lifetime. “First-time” means you haven’t owned a principal residence in the past two years.⁶
Higher education expenses at an eligible institution for you, your spouse, your children, or your grandchildren, covering tuition, fees, books, and required supplies.⁷
Unreimbursed medical expenses that exceed 7.5% of your adjusted gross income.
Substantially equal periodic payments set up based on your life expectancy and continued for at least five years or until age 59½, whichever is longer. Break the schedule early and the IRS applies the penalty retroactively to every payment.
Amounts seized by the IRS under a levy.

Newer Exceptions Under the SECURE 2.0 Act

Congress added several exceptions that took effect starting in 2024:

Emergency personal expenses, up to $1,000 per year, as long as at least $1,000 remains in the account after the withdrawal. You have three years to repay, and you can’t take another emergency withdrawal until you’ve repaid the last one or made contributions matching what you took out.⁸
Birth or adoption, up to $5,000 per parent per child, taken within one year of the birth or finalized adoption. Repayment window is three years.⁶
Domestic abuse by a spouse or domestic partner. Victims can withdraw the lesser of $10,000 (adjusted for inflation) or 50% of the account balance within one year of the abuse, with three years to repay.
Terminal illness, when a physician certifies the account owner is expected to die within 84 months. The certification must come from a medical doctor or doctor of osteopathy and must be obtained before or at the time of the distribution. Repayment is allowed within three years if the condition improves.

Again, on every item in this list, the 10% penalty is waived but ordinary income tax on the earnings portion still applies unless the withdrawal also qualifies under the age and five-year rules.

No Required Withdrawals During Your Lifetime

Roth IRAs don’t force you to take money out. Traditional IRA and 401(k) holders have to start required minimum distributions at age 73, but the original owner of a Roth IRA never does.⁹ The account can keep compounding tax-free for as long as you live, and there’s no forced jump in taxable income that might push you into a higher bracket or bump your Medicare premiums.

Reporting the Withdrawal on Your Taxes

Your Roth IRA custodian reports every distribution to the IRS on Form 1099-R. The code in Box 7 tells the IRS what type of withdrawal it was. Code Q signals a qualified, fully tax-free distribution. Code J flags an early distribution with no known exception. Code T means the custodian couldn’t confirm the five-year period was met, though you may still qualify based on age or another condition.¹⁰

If any part of the distribution is taxable, or if you got a code J or T, you’ll need to fill out Part III of Form 8606 with your return. The form walks through the ordering rules and subtracts your contribution and conversion basis from the total withdrawn to figure out how much, if any, is taxable.¹¹ Keep a running record of your contributions and conversions every year. The IRS doesn’t track your basis for you, and rebuilding those numbers years later, in response to a notice, is much harder than keeping a simple spreadsheet as you go.

1
Internal Revenue Service. Publication 590-B, Distributions from Individual Retirement Arrangements
2
Internal Revenue Service. Roth IRAs
3
Office of the Law Revision Counsel. 26 USC 408A – Roth IRAs
4
Internal Revenue Service. Federal Income Tax Rates and Brackets
5
Internal Revenue Service. Topic No. 557, Additional Tax on Early Distributions from Traditional and Roth IRAs
6
Office of the Law Revision Counsel. 26 USC 72 – Annuities, Certain Proceeds of Endowment and Life Insurance Contracts
7
Internal Revenue Service. Retirement Topics – Exceptions to Tax on Early Distributions
8
Internal Revenue Service. Notice 2024-55, Certain Exceptions to the 10 Percent Additional Tax
9
Internal Revenue Service. Retirement Plan and IRA Required Minimum Distributions FAQs
10
Internal Revenue Service. 2025 Instructions for Forms 1099-R and 5498
11
Internal Revenue Service. Instructions for Form 8606