The Roth IRA 5-Year Rule, Explained in Plain Words
Roth IRA earnings are tax-free only after a 5-year period plus a qualifying event. See when the clock starts, how conversions differ, and payout order.
The appeal of a Roth IRA is that withdrawals in retirement can be completely tax-free. But "can be" carries a condition that confuses many savers: the 5-year rule. There are actually two different 5-year periods in the Roth rules, and they answer two different questions. Separating them makes the whole topic much clearer.
What a qualified distribution is
A qualified distribution from a Roth IRA is not taxed. According to IRS Publication 590-B, a distribution is qualified if it meets two requirements.
First, it is made after the 5-year period beginning with the first tax year for which a contribution was made to a Roth IRA set up for your benefit.
Second, it is:
- made on or after the date you reach age 59 and a half,
- made because you are disabled,
- made to a beneficiary or your estate after your death, or
- for a qualifying first-time home purchase, up to a $10,000 lifetime limit.
Both conditions have to be true. Turning 59 and a half alone is not enough if the 5-year period has not passed, and a 5-year-old account alone is not enough if you are 45 with no other qualifying event.
When the first clock starts
The period starts on January 1 of the first tax year for which you made a Roth IRA contribution, not on the date you opened the account. Because you can make a contribution for a tax year up until the filing deadline of the following year, the clock can start earlier than the day you deposit the money.
Publication 590-B gives an example: a regular contribution for 2024 made on February 25, 2025 starts the 5-year period on January 1, 2024.
Here is how that works out with a first contribution for tax year 2026:
| Event | Date |
|---|---|
| First Roth IRA contribution, for tax year 2026 | Any time from January 1, 2026 through the 2026 filing deadline in 2027 |
| 5-year period begins | January 1, 2026 |
| 5-year period is satisfied | January 1, 2031 |
This clock runs once. After the first Roth IRA contribution for your benefit starts it, later contributions and new Roth IRAs do not restart it.
The second clock: conversions
Conversions from a traditional IRA, and certain rollovers from a workplace plan into a Roth IRA, have a separate 5-year period that answers a different question: whether the 10% additional tax on early distributions applies.
Publication 590-B explains that if, within the 5-year period starting with the first day of the tax year in which you convert or roll over an amount, you take a distribution, you may have to pay the 10% additional tax on the part of the conversion that you had to include in income. A separate 5-year period applies to each conversion and rollover, and it is not necessarily the same as the period used for qualified distributions.
Publication 590-B's example: a conversion made on February 25, 2025 starts its own 5-year period on January 1, 2025, even if a regular contribution for 2024 made the same day started the qualified-distribution clock on January 1, 2024.
Exceptions to the 10% additional tax, such as reaching age 59 and a half, can still apply.
The order money comes out
When a Roth IRA distribution is not qualified, the order matters, because different layers are taxed differently. Publication 590-B sets the order:
- Regular contributions come out first.
- Conversion and rollover contributions come next, on a first-in, first-out basis, with the taxable portion of each conversion considered first, then the nontaxable portion.
- Earnings come out last.
Since your own regular contributions come out first, a withdrawal that does not exceed your total regular contributions generally does not reach earnings. For a nonqualified distribution, Publication 590-B notes that the portion allocable to earnings may be subject to tax and may be subject to the 10% additional tax.
Other Roth IRA basics worth knowing
The IRS's Roth IRA page notes that you can keep contributing after age 70 and a half, that you can leave amounts in your Roth IRA as long as you live, and that the same combined contribution limit applies across all of your Roth and traditional IRAs.
Key takeaways
- A Roth IRA distribution is tax-free if it is made after the 5-year period and you are 59 and a half, disabled, a beneficiary, or using up to $10,000 for a first home.
- The 5-year period starts January 1 of the first tax year you contributed for, not the deposit date.
- A first contribution for tax year 2026 satisfies the period on January 1, 2031.
- Each conversion has its own 5-year period for the 10% additional tax.
- Withdrawals come out in order: regular contributions, then conversions, then earnings.