Learning how to withdraw from Roth IRA accounts can feel complicated because different rules apply to contributions, conversions, and investment earnings.
The good news is that you can generally withdraw your regular Roth IRA contributions without federal income tax or an early-withdrawal penalty.
The rules become more complicated when you reach converted funds or earnings. You should understand the IRS ordering rules, five-year requirements, and possible exceptions before requesting the withdrawal.
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How to Withdraw from Roth IRA
To withdraw money from a Roth IRA, sign in to the brokerage, bank, or financial institution that holds your account. Look for an option such as Withdraw, Transfer Money, Take a Distribution, or Move Money.
If your Roth IRA money is invested, you may need to sell investments before enough cash is available to withdraw. After the trade settles, you can generally transfer the cash to a linked bank account or request another available payment method.
A typical withdrawal involves these steps:
- Sign in to your Roth IRA account.
- Check how much cash is available.
- Sell investments if needed.
- Select the withdrawal or distribution option.
- Enter the amount you want.
- Choose your receiving bank account.
- Review any tax withholding choices.
- Confirm the distribution.
- Save the transaction confirmation.
- Keep the tax forms you receive later.
Your financial institution may use slightly different steps. Processing times can also vary.
Understand What Part of Your Roth IRA You Are Withdrawing
Roth IRA withdrawals follow IRS ordering rules. You generally cannot choose to label a withdrawal as contributions, conversions, or earnings yourself.
The IRS generally treats money as leaving your Roth IRA in this order:
| Withdrawal order | Money treated as withdrawn |
|---|---|
| First | Regular Roth IRA contributions |
| Second | Conversion and rollover amounts |
| Third | Investment earnings |
This ordering rule can make Roth IRA contributions relatively accessible.
For example, suppose you contributed $30,000 over several years and your account is now worth $45,000. If you have no conversions and withdraw $10,000, the withdrawal would generally be treated as coming from your regular contributions.
That $10,000 would typically be free from federal income tax and the 10% early-distribution tax.
Pro Tip: Keep records showing how much you have contributed to your Roth IRAs over the years. Your brokerage may show your current balance but may not maintain every contribution record you will need for tax purposes.
Can You Withdraw Roth IRA Contributions Anytime?
Generally, yes. Regular Roth IRA contributions can usually be withdrawn at any age without federal income tax or a 10% early-withdrawal penalty.
This flexibility is one major difference between a Roth IRA and many other retirement accounts.
Suppose you contributed $6,000 per year for several years and have $24,000 of total regular contributions. If you have never made a previous withdrawal, you could generally withdraw up to that $24,000 without federal tax or an early-distribution penalty.
Your account’s investment gains are different. Withdrawing those earnings may create taxes or penalties if the distribution is not qualified.
You should also remember that withdrawing contributions permanently removes money from your retirement account unless you qualify to put it back under a rollover rule. You generally cannot simply replace an old withdrawal by exceeding your normal annual contribution limit later.
When Are Roth IRA Earnings Tax-Free?
Investment earnings can generally come out completely tax-free when you take a qualified distribution.
A qualified Roth IRA distribution normally has to satisfy two requirements.
First, your Roth IRA must meet the five-year rule. The five-year period generally begins January 1 of the tax year for which you first made a contribution to any Roth IRA established for you.
Second, the distribution must generally occur because:
- You are at least age 59½.
- You are disabled under IRS rules.
- The distribution occurs after your death.
- You qualify for the first-time homebuyer rule.
The first-time homebuyer provision generally has a $10,000 lifetime limit.
If both requirements are met, qualified Roth IRA distributions are generally free from federal income tax and the 10% additional early-distribution tax.
How the Roth IRA Five-Year Rule Works
The phrase “five-year rule” can cause confusion because Roth IRAs actually have more than one five-year concept.
The main five-year rule applies when deciding whether your earnings can be part of a qualified distribution. It starts with the first tax year for which you made a contribution to a Roth IRA.
For example, if you first made a Roth IRA contribution for tax year 2022, your five-year period generally starts January 1, 2022. It can therefore be satisfied at the beginning of 2027.
You do not normally restart this qualified-distribution five-year clock every time you open another Roth IRA.
Conversions have a separate five-year rule. Each conversion can have its own five-year period for determining whether an early distribution of taxable converted amounts triggers the 10% additional tax.
Common Mistakes: Don’t assume every Roth IRA five-year rule works the same way. The rule for qualified earnings and the separate rules for converted money serve different purposes.
What Happens If You Withdraw Converted Money?
Roth conversions usually involve moving money from a traditional IRA or another eligible retirement account into a Roth IRA.
After regular contributions have been treated as withdrawn, IRS rules generally move to conversion and rollover amounts. Older conversions generally come out before newer ones.
If you are under age 59½ and withdraw a taxable conversion amount before its separate five-year period expires, a 10% additional tax may apply unless you qualify for an exception.
You generally do not pay income tax on the converted principal again because the taxable portion was normally included in income when you completed the conversion.
This area can become complicated when you have multiple conversions. Review your Forms 8606 and consider professional tax help before making a large withdrawal.
What If You Withdraw Roth IRA Earnings Early?
Once you have withdrawn all regular contributions and applicable conversion amounts, additional withdrawals generally come from earnings.
If the withdrawal is not qualified, the earnings portion may be included in your taxable income.
If you are younger than 59½, you may also owe the 10% additional early-distribution tax unless an exception applies.
The exception may remove the 10% additional tax without making the earnings tax-free. This distinction is important.
For example, using eligible Roth IRA earnings for qualified higher education costs may allow you to avoid the 10% additional tax. However, the earnings may still be subject to regular income tax if the distribution is not qualified.
What Exceptions Can Avoid the 10% Penalty?
IRS rules provide several exceptions that may allow certain early IRA distributions to avoid the 10% additional tax.
Depending on your circumstances, exceptions may include:
- Qualified first-time home purchases
- Certain higher education expenses
- Certain unreimbursed medical expenses
- Health insurance premiums during qualifying unemployment
- Total and permanent disability
- Terminal illness
- Certain birth or adoption expenses
- Certain emergency personal expenses
- Certain distributions involving domestic abuse
- Qualified reservist distributions
- Certain disaster distributions
- IRS levies
- A qualifying series of substantially equal payments
The requirements differ for each exception. Some also have dollar limits or other restrictions.
Avoid assuming an exception automatically makes the withdrawal tax-free. It may only remove the additional 10% tax.
How Much Should You Withdraw?
You can generally request any amount up to your available Roth IRA balance. The tax consequences depend on what that withdrawal is considered to contain.
Before withdrawing, calculate your total:
- Regular Roth IRA contributions
- Previous Roth IRA withdrawals
- Conversion amounts
- Conversion dates
- Investment earnings
Consider whether you need the entire requested amount at once. Removing more than necessary can reduce the amount left to grow tax-free for retirement.
You should also check whether selling investments creates a poor long-term result. Investment sales inside a Roth IRA generally do not create capital gains tax by themselves, but taking money out can permanently reduce your future tax-free growth.
What Tax Forms Will You Receive?
Your Roth IRA custodian generally sends you Form 1099-R after you take a distribution. The form reports the amount distributed and includes a distribution code.
Keep the form with your tax records.
You may need to file Form 8606, particularly when you take a Roth IRA distribution that is not automatically treated as a qualified distribution.
Form 8606 helps calculate how much of a nonqualified Roth IRA distribution is taxable.
Form 5329 may also be required when the 10% additional tax applies or when you are claiming an exception that is not properly reflected on Form 1099-R.
Keep previous Forms 5498 and 8606 because they can help document contributions and conversions.
Do You Have to Withdraw Money From a Roth IRA?
If you are the original Roth IRA owner, you generally do not have required minimum distributions during your lifetime.
You can leave the money invested regardless of your age.
That makes Roth IRAs different from traditional IRAs, which generally require distributions once you reach the applicable required beginning age.
Inherited Roth IRAs follow different rules. Beneficiaries may have deadlines for withdrawing inherited money.
FAQs: How to Withdraw from Roth IRA
Q. Can you withdraw money from a Roth IRA without a penalty?
A. Yes. You can generally withdraw your regular Roth IRA contributions at any time without federal income tax or the 10% early-distribution tax.
Different rules can apply once your withdrawals reach conversions or earnings.
Q. Do you pay taxes when withdrawing from a Roth IRA?
A. Qualified Roth IRA distributions are generally completely tax-free. Returns of your regular contributions are also generally not taxable.
A nonqualified withdrawal of earnings may be taxable, and an additional 10% tax may also apply.
Q. How long does a Roth IRA withdrawal take?
A. Timing varies by financial institution and investment type. If you first need to sell securities, you may have to wait for the trade to settle before transferring the cash.
Bank transfer processing can add additional time.
Q. Can you withdraw your entire Roth IRA balance?
A. Yes, you can generally close the account and withdraw the full balance. However, taxes and the 10% additional tax may apply to conversion amounts or earnings depending on your age, holding periods, and circumstances.
Review the tax consequences before taking the full balance.
Conclusion
Knowing how to withdraw from Roth IRA accounts starts with identifying what type of money will come out. IRS ordering rules generally treat regular contributions as withdrawn first, followed by conversions and then investment earnings.
Regular contributions can generally come out tax-free and penalty-free, while conversions and earnings have additional rules.
Before making a large withdrawal, check your contribution history, conversion dates, five-year periods, and possible tax consequences.
Disclaimer: This article is for general informational purposes only and isn’t financial, investment, tax, or legal advice. Roth IRA tax rules and penalty exceptions may vary based on your circumstances and can change over time. Verify account-specific questions with your financial institution or a qualified tax professional.
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