Roth IRAs offer significant tax advantages — and, unsurprisingly, there are strings attached. You’ll need to abide by IRS rules for these investment retirement accounts to avoid the sticker shock of penalties or taxes when you take distributions.
Here's a summary of how the Roth IRA five-year rule works:
Contributions: You can withdraw contributions you made to the Roth IRA penalty- and tax-free at any time.
Earnings: If you're under 59 ½ and have held the account for less than five years, withdrawals of earnings are subject to taxes and penalties unless you qualify for an exception.
Conversions and beneficiaries: If you convert a traditional IRA or 401(k) to a Roth IRA, withdrawals are subject to a five-year waiting period to avoid a penalty. Distributions to beneficiaries of a deceased IRA holder are also subject to the five-year rule.
Roth IRA five-year rule for withdrawals
If you've had your Roth IRA account open for at least five years and are 59 ½ or older, you can withdraw your investment earnings tax-free and penalty-free. If you don't wait five years before withdrawing earnings, you may have to pay taxes and a 10% penalty on the earnings portion of your withdrawal.
This five-year rule applies specifically to investment earnings. Contributions made to a Roth IRA can be withdrawn at any time, without taxes and penalty.
The five-year period begins Jan. 1 of the year you made your first contribution to a Roth IRA. Once you clear that five-year period, for withdrawals of earnings to qualify as tax-free, they must also be done after you've reached age 59 ½.
If you've had your Roth for less than five years or are under 59 ½, there are also exceptions that can get you off the hook for the 10% penalty on withdrawn earnings and, in some cases, you might be able to bypass income taxes as well.
» Learn more about Roth IRA early withdrawal penalties
Exceptions to the 10% penalty
Here's a roundup of the conditions that may let you bypass the 10% penalty or both the 10% penalty and the income taxes you would otherwise owe on withdrawn earnings:
Early distributions of earnings for these reasons are considered qualified: not subject to taxes or the 10% penalty | Early distributions of earnings for these reasons are considered exceptions: taxable as income, but not subject to the 10% penalty |
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You've held a Roth IRA for at least five years AND you are taking the distribution in one of the following circumstances:
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Five-year rule for Roth IRA conversions
The five-year rule also applies to funds converted from a traditional IRA or 401(k) into a Roth IRA.
For this rule, the five-year period begins on the first day of the tax year in which you converted money from a traditional IRA (or did a rollover from a qualified retirement plan) to your Roth IRA. For example, if you do a conversion on May 1, 2026, the rule for that conversion actually begins on January 1, 2026. Each conversion or rollover you make is subject to a separate five-year waiting period.
If you don’t wait the requisite five-year period from conversion to withdrawal, you may have to pay a 10% penalty, along with any income taxes owed. The same exceptions apply to the five-year rule of withdrawals of conversions as any other type of early distributions — see the chart above for examples.
» Learn more about Roth IRA conversion rules
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Five-year rule for Roth IRA beneficiaries
Beneficiaries of a Roth IRA are also subject to the five-year rule when the Roth IRA owner passes away. Death is an exception to penalties for early withdrawals, but to avoid ordinary taxes, beneficiaries must still follow the waiting-period rules on withdrawals.
If you are the beneficiary of a Roth IRA, double-check the timing of the account's initial contributions, conversions or rollovers.
» Read more: Learn about your options when you inherit an IRA
Article sources
- 1.IRS.gov. Roth comparison chart. Accessed Feb 9, 2026.
- 2.IRS.gov. Instructions for Form 8606. Accessed Feb 9, 2026.
- 3.Internal Revenue Service. Publication 590-B, Distributions from Individual Retirement Arrangements (IRAs). Accessed Feb 6, 2026.
