What Are the Roth IRA Withdrawal Rules?

Before you tap this tax-advantaged retirement account, make sure you know when a withdrawal can trigger taxes and penalties.

Written by Devon Delfino / March 29, 2022

Quick Bites

  • You can take out the money you contribute to a Roth IRA at any time without paying a penalty.
  • To withdraw Roth IRA earnings, however, you must meet certain requirements to avoid penalties and taxes.
  • Early withdrawal penalties typically kick in if you’re under 59½ years old, but there are exceptions to this rule.
  • When you’re ready to withdraw money from your Roth IRA, you won’t face any limits on how much you can take out, nor rules for minimum distributions.

Building up your retirement accounts is a marathon. And while steady savings is what will get you to the finish line, avoiding missteps in the form of costly withdrawals can be just as important.

Then once you’ve crossed the finish line and reached retirement, you need to understand the withdrawal rules in order to make the most of your hard-won savings.

With a Roth IRA, you enjoy unique tax benefits—you invest money you’ve already paid taxes on, but then your qualified withdrawals are 100% tax-free. But you must follow specific rules to enjoy tax- and penalty-free income. Here’s what you need to know.

Inside this article

  1. Withdrawing from a Roth IRA
  2. Qualified withdrawals
  3. Non-qualified withdrawals
  4. Avoiding penalties
  5. How much you can withdraw
  6. If you must take money out early

When you can withdraw money from a Roth IRA

Any time you take money out of a retirement account, you may face income taxes, penalties or both. With a Roth IRA in particular, the withdrawal rules vary based on several factors, including:

  • Your age

  • How long you’ve had the account

  • What you plan to do with the money

  • Which funds you’re taking out

You can take out the money you contributed to a Roth IRA at any time without paying a penalty.[1] In fact, the IRS assumes that you’re withdrawing contributions first whenever you tap the account.[2]

So as long as you withdraw no more than you’ve contributed to the Roth IRA, you don’t have to worry about being slapped with a 10% early withdrawal penalty. Plus, you already paid taxes on your contributions, so the money is tax-free.

When it comes to the earnings that have built up within your Roth IRA, however, the withdrawal rules get far more complicated. To take that money out penalty-free, you generally need to wait until you’ve reached age 59½ and have had the account for at least five years (that’s called the five-year rule).[3, 4] Let’s dig in to the details.

How qualified withdrawals work

The IRS refers to withdrawals as “distributions,” and these come in two flavors: qualified, which are not subject to taxes and penalties, and non-qualified, which may be.[4]

To be considered a qualified distribution, withdrawals need to meet the five-year rule, and at least one of the following must be true[4]:

  • You are at least 59½ years old

  • You require funds because of a disability

  • The money is going to a beneficiary or estate due to your death

  • You meet the requirements for the first-time home purchase exception (more on that later)

As long as you meet the requirements for a qualified distribution, you won’t pay income taxes or penalties on a Roth IRA withdrawal.

How non-qualified withdrawals work

If you take Roth IRA earnings out ahead of schedule and it’s not for one of the reasons listed above, it’s considered a non-qualified distribution and you will typically have to pay income taxes as well as a 10% penalty on that money.[3, 4]

For example, say you contributed $6,000 to a Roth IRA, and the account is now worth $8,000. If you withdraw the full $8,000 before you reach age 59½—and you haven’t had the Roth IRA for at least five years—the $2,000 in withdrawn earnings would be taxable and subject to a 10% penalty (or $200).

“If you can avoid it, don’t pull from Roth IRAs unless absolutely necessary,” says Brock Jolly, a Certified Financial Planner in Virginia.

Even if you stick to your contributions, there’s another downside to consider. “While you can access your original contribution amount without taxes or penalties, an investor cannot re-contribute this amount once it’s withdrawn,” Jolly adds.

Tip: If you expect to pay taxes and penalties on a Roth IRA early withdrawal, you may want to make an estimated tax payment in advance so you avoid an underpayment penalty on your tax return.[3]

Avoiding early withdrawal penalties

If you are at least 59½ and make a withdrawal from your Roth IRA, you won’t have to pay a penalty even if you don’t meet the five-year rule. But you will owe income taxes on the earnings you withdraw.[4]

If you are younger than 59½, you can avoid an early withdrawal penalty in certain circumstances, including if:

  • You become disabled

  • You take out $10,000 or less to put toward buying a home for the first time

  • You use the withdrawal to pay for qualified higher education expenses

  • You use the withdrawal to pay qualified medical expenses

  • You use the withdrawal for qualified birth or adoption costs

  • You die and the Roth IRA goes to a beneficiary or your estate

In all these cases, the earnings you withdraw will be subject to income taxes because you haven’t yet met the five-year rule. If you do meet the five-year rule, you will not have to pay income taxes.

Tip: If you aren’t sure if your withdrawal will be subject to taxes or penalties, use the IRS’s online quiz to help you figure out where you stand.

How much you can withdraw from a Roth IRA

Once you retire and start living off your retirement accounts, there’s no limit to how much, or how little, you can take out of a Roth IRA every year.[4] But many retirees choose to withdraw tax-free Roth funds strategically as a way to keep their overall taxable income low in any particular year. That way, they can enjoy more of the money they worked so hard for when they aren’t actively making money.

Plus, unlike with a traditional IRA, with a Roth IRA you are never forced to make withdrawals.

Because you are not subject to required minimum distribution rules at age 72, you can leave the account alone for as long as you like.

If you must take money out early

While it may not be ideal to take money out of a Roth IRA early, it is an option if you’re facing a serious financial challenge. “If you need to take a distribution, take as little as possible, especially if you think the account could grow,” advises CFP Jolly. “That said, if there is an emergency or it becomes tough to make ends meet, it’s important to understand that you can access this money.”

You also have the option to take a Section 72T distribution, which can be a useful way to reduce the cost of withdrawing funds early. In this case, you must take “substantially equal” periodic payments over five years, or until you reach age 59½, whichever is greater. In exchange, you avoid the 10% penalty.[5]

Article Sources
  1. “Topic No. 451 Individual Retirement Arrangements (IRAs),” Internal Revenue Service, https://www.irs.gov/taxtopics/tc451.
  2. “Roth IRA Distribution Rules,” Wells Fargo, https://www08.wellsfargomedia.com/assets/pdf/personal/investing/retirement/ira/roth-distribution-rules.pdf.
  3. “Topic No. 557 Additional Tax on Early Distributions From Traditional and Roth IRAs,” Internal Revenue Service, https://www.irs.gov/taxtopics/tc557.
  4. “Publication 590-B (2020), Distributions from Individual Retirement Arrangements (IRAs),” Internal Revenue Service, https://www.irs.gov/publications/p590b.
  5. “Substantially Equal Periodic Payments,” Internal Revenue Service, https://www.irs.gov/retirement-plans/substantially-equal-periodic-payments.

About the Author

Devon Delfino

Devon Delfino

Devon Delfino is a writer who’s covered personal finance—including everything from student loans to budgeting to saving for retirement and beyond—for the past six years. Her financial reporting has appeared in publications like the L.A. Times, U.S. News and World Report, Teen Vogue, Masha

Full bio

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