Roth IRA Withdrawal Rules
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Contributions can be withdrawn from a Roth IRA at any time without tax implications or withdrawal penalties.
Unless it's a qualified distribution, withdrawing earnings before retirement age could incur a 10% penalty and income taxes.
To withdraw earnings tax- and penalty-free, you must have held a Roth IRA for at least five years and be at least age 59 ½.
Each type of retirement account comes with specific tax advantages. With a Roth IRA, contributions aren't tax-deductible, but the earnings grow tax-free, and qualified withdrawals can be made without taxes or penalties.
Whether an IRA withdrawal is considered "qualified" depends on factors such as your age, length of time the account has been open, withdrawal purpose and more.
When can you withdraw from a Roth IRA?
You can withdraw contributions — the money that you added to your Roth IRA — at any time without taxes or penalties. When it comes to withdrawing earnings — the investment gains that grow in the account — two criteria generally need to be met for a tax- and penalty-free withdrawal: the account needs to have been open for five years, and the owner has to be age 59 ½ or older.
There are some exceptions that allow individuals to tap into their Roth IRA earnings early without incurring penalties.
» A deep dive on the Roth IRA five-year rule
Roth IRA distribution rules: Qualified vs. non-qualified
Qualified distributions: A qualified distribution from a Roth IRA is when you can withdraw investment earnings without taxes or penalties.
Non-qualified distributions: A non-qualified distribution from a Roth IRA is when withdrawing investment earnings incurs taxes, penalties, or both.
How qualified Roth IRA distributions work
To make a qualified distribution of investment earnings from a Roth IRA without taxes or penalties, the Roth IRA must be at least five years old, and one of the following should apply:
You are age 59 ½ or older.
The withdrawal is due to a disability.
The withdrawal is made to a beneficiary or your estate after your death.
The withdrawal is for buying, building, or rebuilding a first home (up to a $10,000 lifetime limit).
How non-qualified Roth IRA distributions work
Making a Roth IRA withdrawal outside of the above requirements could result in income taxes and a 10% penalty. However, there are exceptions to the 10% penalty — but not ordinary income taxes — if you meet one of the following:
You have unreimbursed medical expenses that are more than 7.5% of your adjusted gross income.
The distribution is for the cost of your medical insurance during unemployment.
You are receiving distributions in the form of a series of substantially equal periodic payments.
You are taking the distribution for qualified higher education expenses.
You are a survivor of domestic abuse.
The distribution is due to an IRS levy.
You made the withdrawal when you were a reservist, as defined by the IRS.
The distribution is for a qualified birth or an adoption of a child.
The distribution is a qualified disaster distribution or qualified disaster recovery distribution.
The distribution is a corrective distribution.
» See our picks for best Roth IRA accounts
How to plan a Roth IRA withdrawal
Making a financial plan for retirement often starts with estimating how much you'll need and how much you can contribute, but it also includes planning withdrawals.
With a Roth IRA, withdrawals are already more flexible because you can take out contributions at any time. But there's one more reason: Roth IRAs aren’t subject to required minimum distributions, unlike traditional IRAs or 401(k) plans.
That means account owners aren’t required to make withdrawals, even in retirement, and can allow the funds to continue to grow. And after account holders die, the money in the account can be passed along to the account beneficiary.
Taking money out of a Roth IRA early means potentially losing out on long-term growth, but if you're in a tight spot financially, it can be one option.
Some parameters to guide your decision about an early Roth IRA withdrawal could include how much you think you'll need, whether you're eligible for a qualified or non-qualified withdrawal, and estimating what the taxes and penalties (if any) might be if you plan to take out earnings.
» Learn more about Roth IRAs and how to open an account.
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