Roth IRA Withdrawal Rules – How and When You Can Access Your Funds

by Ryan Guina

The Roth IRA is a great investment option that offers tax free growth and tax diversification, and is an important part of many people’s retirement planning. Unfortunately, things don’t always go as planned and you may need to make a withdrawal from your Roth IRA before you reach retirement age.

Thankfully, the Roth IRA is also one of the most flexible retirement account options because you can make tax and penalty free withdrawals of your Roth IRA contributions at any time. However, it is important to understand how Roth IRA withdrawal rules work. Otherwise you may subject yourself to a 10% early withdrawal penalty. It is also a great idea to get ideas on where to open a Roth IRA, and not just go with your first choice, you need to know all your options.

Roth IRA withdrawal Rules

Roth IRA Withdrawal Rules

Don’t treat your Roth IRA like an ATM!

In general, you can make tax and penalty free withdrawals of the principal (contributions) at any time. However, the earnings from your principal cannot normally be withdrawn under age 59½ without paying the 10% early withdrawal penalty. Earnings can generally be withdrawn without penalties after age 59½, provided you meet the 5 year rule.

There are exceptions to these rules. Read on to learn more about qualified and non-qualified distributions, and as always, consult with a financial professional if you have any questions before you make any withdrawals or distributions.

Roth IRA 5 year rule. Withdrawals from your Roth IRA will only be classified as qualified distributions if it has been at least 5 years since you first opened and contributed to your Roth IRA, regardless of your age when you opened it. As an example, you can normally make penalty free withdrawals at age 59½, but if you made your first contribution at age 58, you would need to wait until age 63 to withdraw any earnings made on that portion of your contributions.

Roth IRA Qualified and Non-qualified Distributions

It is important to understand the difference between qualified and non-qualified distributions before making any withdrawals or taking distributions from your Roth IRA. Provided your it meets the 5 year rule, a qualified distribution from your Roth IRA will be both tax and penalty free, which is important because either of these can seriously erode any gains your investments may have earned. A non-qualified distribution may trigger both taxes and early withdrawal penalties, decimating the value of the investments in your Roth IRA.

Qualified distributions. Qualified distributions are withdrawals that are both tax and penalty free. In most cases, withdrawals made after age 59½ will be qualified distributions, provided they meet the 5 year rule for investment gains. According to IRS Publication 590:

A qualified distribution is any payment or distribution from your Roth IRA that meets the following requirements.

1. It is made after the 5-year period beginning with the first taxable year for which a contribution was made to a Roth IRA set up for your benefit, and
2. The payment or distribution is:

  • Made on or after the date you reach age 59½,
  • Made because you are disabled,
  • Made to a beneficiary or to your estate after your death, or
  • One that meets the requirements listed under First home under Exceptions in chapter 1 (up to a $10,000 lifetime limit).

Non-qualified distributions. Non-qualified distributions are withdrawals which do not meet the requirements of a qualified distribution, and may be subjected to taxes or early withdrawal penalties. In many cases, non-qualified distributions will be taxed as ordinary income and be subjected to the 10% early withdrawal penalty.

Exceptions to early withdrawal penalty (aka 10% penalty)

There are some exceptions that allow you to make withdrawals from your Roth IRA that are subjected to ordinary income taxes, but are not subjected to the 10% early withdrawal penalty. Some of these include:

  • The distributions are part of a series of substantially equal payments (minimum five years or until the Roth IRA owner reaches age 59½, whichever is longer).
  • You have unreimbursed medical expenses exceeding 7.5% of your Adjusted Gross Income (AGI).
  • You are paying medical insurance premiums after losing your job.
  • The distributions are not more than your qualified higher education expenses (for yourself or eligible family members).
  • The distribution is due to an IRS levy of the qualified plan.
  • The distribution is a qualified reservist distribution.
  • The distribution is a qualified disaster recovery assistance distribution.
  • The distribution is a qualified recovery assistance distribution.

Order of Roth IRA Distributions

The IRS makes it easier for taxpayers to make penalty free withdrawals from their accounts by the way they assign the order of IRA withdrawals. Again, referring to IRS Publication 590, Roth IRA distributions occur in the following order:

  1. Regular contributions.
  2. Conversion and rollover contributions, on a first-in first-out basis.
  3. Earnings on contributions.

As you can see, regular contributions are the first to be withdrawn, and they can be withdrawn at any time without taxes or penalties. The taxable portion of your withdrawals is held until the end, making it easier for you to make a penalty free withdrawal.

Roth IRA Withdrawals for first home purchase or college expenses

Roth IRA withdrawal to buy home

Just because you can, doesn’t mean you should…

Roth IRAs have a feature that allows account holders to make qualified distributions for a first home purchase or for qualified college expenses.

First home purchase withdrawal from Roth IRA. Early Roth IRA withdrawals for the purchase of a first home are allowed up to a $10,000 life time maximum per account. Withdrawals can be made for the purchase of your first home, or the benefit can be used for your children or grandchildren. However, the $10,000 limit is always in effect, regardless of who the money is used for.

Using a Roth IRA for college expenses. You can avoid early withdrawal penalties associated with early Roth IRA distributions if you use the funds for qualified higher education expenses for yourself, your spouse, your children, or their descendants.

Pros and Cons of early Roth IRA withdrawals

The ability to make tax and penalty free withdrawals from Roth IRAs is a level of flexibility not found in most other retirement accounts. But just because you can do it doesn’t mean you should. Even though you may not pay any taxes or penalties to withdraw some of your funds, doing so may hurt your long term retirement planning.

Roth IRAs offer a great tax diversification strategy and making early withdrawals, qualified or not, hampers your retirement planning and limits the amount of money you will have in retirement. Compound interest is one of the most powerful forces in the universe, but making withdrawals limits the amount of money you have working for you and reduces the amount of time your money has to compound, effectively reducing your potential retirement nest egg. I recommend looking at all options before making early withdrawals from your Roth IRA.

Published or updated January 4, 2017.
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{ 46 comments… read them below or add one }

1 fredct

Great summary of a very important subject, Ryan. Everyone who’s eligible who make funding a Roth IRA a key part of their planning.

Now, as you’re probably used to from me… heh… I need to correct one small thing…

First, I believe you’ve misstated the 5 year rule. Or at least what’s in that first gray box is misleading. My understanding is it only needs to be 5 years from your *first* contribution. So that “age 58/63” example is only true if you make your first contribution to *any* Roth at age 58. Not simply add to an existing Roth.

See here for my source (particularly Figure 2-1):

Other than that, I just want to emphasis the ‘Substantially Equal Periodic Payments’ option, especially for people who retire early. Its a great and entirely legit ‘loophole’ for people who want to retire early. Even though you’ve probably repeatedly heard that you can’t access IRA money without penalty until age 59 1/2, that’s not really true.

Just make sure you know what you’re doing, or consult a professional if you’re not comfortable with it, because you have to withdraw enough, and continue doing so for long enough, in order to not end up owing all the back taxes & penalties that you’ve avoided.


2 Ryan

Fred, thanks for that head’s up and for sharing the link to IRS pub 590. The item in question has been corrected. 🙂


3 Daddy Paul

Nice well written! Trying to go through the IRS rules on this is a nightmare. This is laid out very well.


4 PK

Don’t forget that even though you are taking a non-qualified distribution, you can withdraw contribution at any time (before 5 years etc) penalty and tax free.

I also do not think than any distribution will be subject to ordinary income taxes, with the exception of non-qualified earnings distributions.


5 PK

Oops, just saw the line where you stated it. Missed it the first time through.


6 Money Reasons

Nice expansion on the Roth IRA withdrawal rules!

The reasons listed above is why I will be using a Roth IRA as an emergency fund in addition to a retirement vehicle!

Why us it as an emergency fund? Because I don’t ever expect to use it, but if I have to, it’s there!


7 Nancy

I am considering a home purchase, and it’s not my first home, so I do not have a qualified distribution.

However, I can withdraw any amount no greater than my contributions, and I am fine, right?

I really don’t want to be hit with a tax or penalty, and the rules are confusing. Most web sites I’ve seen talking about Roth IRA’s only talk about withdrawals in terms of the earnings…


8 fredct

Depends what you mean by ‘fine’. If you withdraw money from your IRA, you will forever lose all tax free earning potential for that money. It will no longer be growing tax free or invested for you in your retirement accounts.

I would seriously urge you to consider taking the time to save the money regularly before you purchase your home. The home market isn’t exactly going to run away from you in the meantime these days. Robbing from your retirement savings to purchase your home is something I really wish you would reconsider.

However, since I’m think you’re only asking from a tax perspective, the answer is yes:
“Are Distributions Taxable?
You do not include in your gross income qualified distributions or distributions that are a return of your regular contributions from your Roth IRA(s). You also do not include distributions from your Roth IRA that you roll over tax free into another Roth IRA. You may have to include part of other distributions in your income. See Ordering Rules for Distributions , later.”


9 tony

These are great stuff. You guys are great. I am still not clear on one issue.

I think I read somewhere that you can withdraw from your Roth IRA before you 59.5 years old without paying either tax & penalty. but you have to withdraw equal amount for 5 years.

Here is the specifics:

The Roth IRA was open over 10 years ago – a rollover from an IRA & I never made any more contributions since.

Already took out the entire original amount of the rollover, so only gains left in the account.

Can I still withdraw (say $40k) each year for 5 years without both tax & penalty?
Or I have to pay regular income tax, but no 10% penalty.
Or I have to pay both tax & 10% penalty?



10 Ryan

Tony, based on my understanding of the IRS Publication 590, you can make early withdrawals and avoid the 10% penalty (but you still have to pay income taxes) if the distributions are part of a series of substantially equal payments for a duration of a minimum of five years or until you reach age 59½, whichever is longer.

However, I am not 100% certain of the implications in your situation and I highly recommend contacting a financial planner or tax professional before making any withdrawals from your Roth IRA.


11 fredct

Yup, the term is “substantially equal periodic payments” (SEPP). If you google that, you’ll find a lot about the pros and cons.


12 Mark

My question regarding withdrawals from the Roth is this: I was told that one can withdraw money from their Roth if it is only the basis of what they put into it…not to include the interest accrued. …and that it has be more than 5 years ago. So, any money that I put into my Roth starting before July 2005 is fair game for me to withdraw (only the basis). Is this correct?


13 fredct

Here’s the answer straight from the horse’s mouth:

(the answer to your question is right at the beginning of that section (‘Are Distributions Taxable’) – just read up to and including the figure, i’m not sending you to something that you have to read pages and pages of)


14 Marcy

One question I have is if a client has multiple Roth IRAs at different financial institutions, when taking a distribution, is it correct that they should be taking into consideration all contracts for determining what would be taxable. For example Joe has made $5000 contributions to 4 Roth IRAs to diversify his investments. Joe is under age 591/2 therefore not qualifying for a distribution under current IRS rules. He decides in year three to take a $6000 distribution out of Roth IRA 1 that is now worth $7000. Even though Roth IRA 1 has a gain, because he has three other Roth IRAs with contributions totaling $15,000 Joe would not experience any taxable income for this distribution. It is up to Joe to maintain a papertrail of the contributions he has made to the IRS and file an 8606 form when filing his tax return. It would be appreciated if you could let me know your thoughts regarding my interpretation.



15 Ryan

Marcy, I am not a professional financial or tax advisor, so I will have to defer this question for a pro.

On a side note, I am not sure why he had to open IRAs at several different institutions to achieve diversification unless those particular investments were only available with the specific financial institutions he uses. It would probably be easier to manage the investments if they were housed in fewer locations. It might not be a bad idea to take a closer look at the investments he has to determine if there is a single investment firm that offers the right mix of diversified investments for his needs. Most brokerage firms offer a competitive selection of investment opportunities, so he may be able to roll over several IRAs into one or two IRAs, which could make some things much easier.


16 fredct

Again, it’s all laid out in IRS Publication 590. There’s no need for any interpretation.

While I believe you’re on the right track (counting multiple same-type IRAs as one), I didn’t follow all the particulars and I don’t know if the rules vary depending on the type of IRA or other details.

But I know exactly where you can go to find out:


17 Daniel Hair

I had to withdrawl from my Roth IRA to pay a tax debt. Any way to get around the 10% early withdrawl penalty?


18 Josh E.

If I’m understanding this correctly, if you are under 59.5 AND you make a withdrawal – provided it’s the principle only – this is not subject to a 10% penalty?

I’m hoping that’s the case as some of the information out there is conflicting.


19 Ryan

Josh, the money also has to pas the 5 year test – meaning it must have been in the account for 5 years before you can withdraw it. But when in doubt, always consult a financial professional.


20 Steve

I withdrew a portion of my contribution from my Roth IRA. The 1099-R form I received list the proper amount withdrawn in the Gross Distrbution box 1 and in box 2b checked Taxable amount not determined. In box 7 the distribution code listed is J = Early distribution from a Roth IRA, no known exception. I under 591/2, but can not figure out how to enter the 1099-R information into my income tax return to reflect the amount withdrawn is 100% my contribution portion and not earnings. Any ideas?




21 Ryan

Steve, I recommend speaking with a tax or investment professional to make sure your forms are filled out properly. It’s worth paying for professional advice specific to your situation any time you deal with retirement accounts.


22 fredct

Steve, are you doing your taxes by hand, or using tax software?


23 Steve


I was doing them through, but after reviewing the federal form and instruction booklet, it appears there are more options if I proceed by hand. Seems the software has limitations. Kind of frustrating since this does not seem like a difficult transaction to document. I plan to try Turbo Tax this weekend to see if it accepts my basis, otherwise, long hand it is.

Let me know if you have any other advice.



24 fredct

Steve, I use taxact, so I just took a look… what you need to do is enter a basis for the IRA.

On the Help bar on the right, search for “basis in Roth IRA”, without the quotes. The first result will be “FAQ – Roth IRA – Entering Basis of Nonqualified Distributions” and it has step-by-step instructions.

They key is that, when entering the 1099-R, check the box that says “taxable amount not determined” (box 2b) and enter “J” as the code in box 7.

Then, when you’re done, go back to the “Federal Q&A” and under “retirement income” you’ll see a choice for “Nondeductible IRA’s (Form 8606)” (for you or your spouse). Click it, then Click ‘yes’ to review, and a couple screens later you’ll get to the “Roth IRA Distributions – Basis” screen, where you can enter your basis. Form 8606 it the one that has this information.

If you can’t follow my instructions, the Help should be more detailed.

I admit that TaxAct isn’t quite as friendly as I’d like (it should really give you that option without going back to the Form 8606), but it’s much cheaper than the others, so I’m willing to dig into the help to get the answer.

I’d also suggest giving them feedback on this… I’ve had a lot of luck with them implementing changes of mine the following year.


25 Steve


Thank you. Your help got me to where I needed to be. Appreciate you taking time to help a fellow tax payer!

Let me know if you are ever passing through Keokuk, IA and I’ll pick up dinner.



26 Shawn

My wife and I had this exact same issue. Thanks for posting the steps for


27 Val

Thanks for posting the taxact steps for form 8606, for Steve and others (including me), it was very helpful !


28 Scott

freedct – I had the exact same issue in TaxAct too! thanks so much for figuring it out for us!

29 Steve Sertell

My understanding of the ROTH IRA is that one can take money out of it as long as the initial ROTH has been active for over five years and the person is 59 1/2 or older. The actual funds that the money was put into do not need to stay in the ROTH for five years, i.e. the ROTH was opened in 2003 but the individual draws from a mutual fund contribution made in 2008 that is part of the ROTH. That said, it wouldn’t seem logical for someone to put money in a ROTH at age 70, if he or she couldn’t touch it until they were 75. Where does the truth lie? Thanks.


30 fredct

I don’t understand your confusion Steve. First, you can only contribute to an IRA if you have earned income (i.e. income from a job). So few 70-year-olds will quality to make an IRA contribution anyhow.

Second, what you state would only be true if the 70 year old had never contributed to a Roth at any time if the previous 70 years of their life.

Third, the 5-year rule only applies to *profits* on a Roth. You can take out your contributions at any time.

Finally, if that’s the case – there’s a working 70 year old who has never contributed to a Roth before *and* they need all the money (including profits) in less than 5 years , then, yes, a Roth probably doesn’t make any sense.


31 Jack Lee

I am over 70 yrs. old and have “rolled over” monies from my Traditional IRA but would like to move some monies into a Roth IRA. I intend to use it to pay college expenses for my grandchildren which I understand is a “qualified expense”. Are such withdrawls subject to the 5 year rule?


32 fredct


If you read my previous post, the 5 year rule only applies to profits (gains) in the Roth. Anything you rolled over would be part of your basis, so that’s not really an issue.

However, I’m very confused why you want to roll it to a Roth. WHy not just take it from the Traditional when you’re ready? By moving it to a Roth, all you’re really doing is recognizing the taxes early. Why pay taxes earlier?


33 JP

fredct you saved the day…..

I was having issues with figuring out how to navigate on TAxact to input the basis of my Roth IRA contribution and I found your tips to be spot on.

– JP


34 Patrick R.

I started contributing to a Roth 401k in January of 2007. I rolled it over to a Roth IRA when I changed jobs in December of 2010 and have since made no additional contributions. Do you know if the 5-yr rule applies to the pre-rollover opening/contribution date or the post-rollover opening/roll-over date? The rollover was handled properly and managed between institutions vs. me ever touching the money, if that helps at all.


35 Fred

Patrick, according to the link below, the 5 year period starts when you open your (first) Roth IRA. It explicitly addresses your situation too. So the time goes with your account, not withe the money.!/entry/know-the-rules-for-roth-401k-rollovers,5102b778d7fc7b56700453f1/4

So if that was your first Roth IRA then the 5 year clock started in 2010. If you rolled it into an existing one, or otherwise had a Roth IRA before, then the opening of that count is the relevant date. I haven’t reviewed any IRA docs, but read the above Investopedia link.


36 Roy

If one is over 59.5 and the Roth account is well over the 5 year requirement … in that case … is there any restrictions at all regarding distributions? … are there any penalties at all on distributions in that case? … even if one has made contributions to the Roth recently?


37 fredct

I don’t believe so. My understanding is the 5 year clock ends 5 years after you open your first Roth. It’s a counter for your whole Roth/all your Roths together, not for each individual dollar separately.

However, since I’m not a tax pro, you should either consult one, or at least read IRS publication 590 for yourself – Ch 2 discusses Roths:
And here’s the link to the Section on distributions:


38 Brent

Hi fredct,

I have a very specific question for you. I am less than 59.5 years old and want to withdraw some of my contribution (cost basis) from my Roth IRA. The purpose of my withdrawal is to use the money for an alternative investment. This is not a qualifying distribution by any means. Nevertheless, it is a withdrawal of cost basis only. My hope is to withdraw the full amount I need (all of which is less than the cost basis and represents contributions only); however, some of this withdrawal would represent contributions that are less than 5 years old as a result. I recognize that keeping the money in the Roth IRA and benefitting from compounding interest over time is generally the smartest choice, but my alternative investment opportunity is one I want to pursue and I am hopeful for high returns.

Given the above, will I incur the 10% penalty fee or taxes on any portion (both the 5+ year-old-portion and the <5 year-old-portion) of my proposed withdrawal (all of which is cost basis/contributions)? Thanks so much.


39 fredct

Disclaimer: I am not a tax attorney and not a substitute for doing your own research or consulting with a professional.

I don’t believe you will. The answers are all in the link I provided above. One phrase I see there is: “Are Distributions Taxable?
You do not include in your gross income qualified distributions or distributions that are a return of your regular contributions from your Roth IRA(s). ”

A CNN article says the same thing:
“You may withdraw your contributions to a Roth IRA penalty-free at any time for any reason, but you’ll be penalized for withdrawing any investment earnings before age 59 ½, unless it’s for a qualifying reason. ”


40 Lance

If I have qualified distributions of say $10,000 available to withdraw from my Roth IRA, am I able to withdraw those funds at different times in a one year span. For example, if i took out $2,000 in Jan. 2014, then $2,000 in Feb. 2014 and then the final $6,000 in March 2014, would it affect the tax free/penalty free qualified distribution? I know most people talk about taking a one time withdrawal in a calendar year, but I would like to make multiple withdrawals in that calendar year. I am assuming it is the same as taking a distribution just once during the calendar year. Thanks


41 Buckeyegirl

I see this thread is a few years old but I just want to say thank you fredct. I was preparing taxes when I came across the issue of Box 7 and entering J. The tax software I was using had given me an error message stating that I could not complete the tax return because it did not support 1099’s with this code. I almost gave up and filed w/o it and amend it later. I decided to do some research about non-qualified distributions with code J and came across this thread. So your comment was very helpful. I am switching my software to so I can submit the return by the deadline. Whew, you just saved me from having to complete it manually.


42 Cora

I would like to use my Roth IRA to pay for my son’s college tuition and other educational expenses. Will that qualify for a penalty free and tax free, since i am only 55 yrs old? Is it also possible to pay the money directly to the school?


43 Jcarlos

Can I use money from my Roth IRA to pay for years of service credit with my employer?


44 Ryan Guina

Jcarlos, I recommend speaking with a tax professional to understand the rules regarding the Roth IRA withdrawals and how this will affect your account. It may be possible to withdraw the contributions and use those funds. But make sure you receive guidance to ensure you don’t make a mistake and end up owing taxes or penalties. This is something you definitely want to get right the first time, and paying a tax professional for guidance is a very smart move as it will help you avoid potentially costly mistakes.


45 Pushpa

I need some clarification on my situation about ROTH IRA – I contributed 11k as Traditional IRA, then converted to Roth and paid the tax or whatever was needed to convert. Then kept in Strong brokerage account for 5 more years, then transferred ALL $20K [my own money and gains etc.] to Schwab brokerage account. And didn’t put any money for past 10 years. Now 2016, I withdrew $7500 to pay my ex as part of cash payment that I had to do of the settlement. Schwab sent me 1099.R and there is a code J in box 7 and not other places there is tax amount. its all zero. Now I tried reaching both brokerage company and they are not able to give me any info on what is the actual gains, what is the actual conversion to roth etc. I am now wondering what tax if any I have to pay or not at all. I am under 59. Can someone help please.


46 Ryan Guina

This is a question for a tax professional. They should be able to help you understand the consequences of this withdrawal and how to code everything for your taxes. That said, if the withdrawal was classified as part of the contributions and it has been more than 5 years, you may not have any problems. See the 5 Year Rule mentioned above. But I would certainly consult with a tax professional for verification.


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