You don't pay taxes on Roth IRA withdrawals in retirement, but the rules depend on how long you've held the account and your age when you withdraw

The short answer: money you withdraw from a Roth IRA after age 59½, as long as the account has been open for at least five years, comes out tax-free. That includes the earnings—the money your investments made. This is the main reason people choose a Roth over a traditional IRA.

But there are two catches. First, you have to follow the five-year rule: your Roth must have been open for five tax years before you can withdraw earnings without a penalty. Second, you have to be at least 59½ years old (with a few exceptions). Break either rule, and you'll owe income tax on the earnings portion plus a 10% early withdrawal penalty.

The contributions you put in—the money you deposited yourself—can always come out tax-free and penalty-free, at any age, at any time. Only the earnings are restricted.

Key Takeaways

  • Roth IRA contributions (the money you deposited) can be withdrawn anytime, tax-free and penalty-free, regardless of your age.
  • Earnings (investment gains) are tax-free only if you are at least 59½ years old and the account has been open for five tax years.
  • Withdrawing earnings before 59½ or before the five-year mark triggers income tax on those earnings plus a 10% penalty.
  • You never pay taxes on money going into a Roth IRA, and you don't have to take required minimum distributions in retirement.

How the five-year rule works

The five-year clock starts on January 1 of the year you first open any Roth IRA. It doesn't reset if you open a second Roth account. If you opened your first Roth in 2020, the five-year period ends on January 1, 2025—and you can withdraw earnings tax-free starting that date (assuming you're also 59½).

This rule applies to earnings only. Your contributions are never subject to it. You can pull out $5,000 you deposited in 2024 in 2025 without waiting five years. But if that $5,000 grew to $5,500, the $500 in earnings stays locked until the five-year window closes.

If you inherit a Roth IRA from someone else, you have a separate five-year clock. The five years runs from when the original account owner first opened their Roth, not from when you inherited it. This matters if you inherit a Roth that's only been open for two years—you'll still have to wait three more years before you can withdraw the earnings tax-free.

What happens if you withdraw earnings before 59½

If you take out earnings before you turn 59½, you owe income tax on those earnings at your regular tax rate, plus a 10% early withdrawal penalty. The penalty applies to the earnings amount only, not to your contributions.

Example: You opened a Roth in 2020 with $5,000. It's now 2024, it's worth $6,000, and you're 45 years old. You withdraw $6,000. The $5,000 in contributions comes out tax-free. The $1,000 in earnings is taxed as income, and you owe a 10% penalty ($100) on top of the income tax.

There are a few exceptions where you can withdraw earnings before 59½ without the 10% penalty (though you still owe income tax on them): first-time home purchase (up to $10,000 lifetime), may have access to education expenses, birth or adoption of a child (up to $35,000 per person, per lifetime), and disability or medical expenses. These exceptions are narrow and have specific rules—check with a tax professional before relying on them.

Conversions and the pro-rata rule

If you convert money from a traditional IRA to a Roth IRA, the five-year rule applies separately to that conversion. Money you convert is treated as a new contribution for five-year purposes, starting from the year of conversion.

There's also a pro-rata rule that affects conversions. If you have both a traditional IRA and a Roth IRA, and you convert part of the traditional IRA to a Roth, the IRS treats the conversion as coming proportionally from your pre-tax and after-tax money in all your traditional IRAs combined. This can create unexpected tax bills if you have a large traditional IRA balance. Many people don't realize this rule exists until tax time.

Taxes on contributions and conversions going in

You never pay taxes on money going into a Roth IRA. Contributions are made with after-tax dollars—you've already paid income tax on that money before it goes in. That's why withdrawals come out tax-free.

If you convert a traditional IRA to a Roth, you pay income tax on the amount you convert in the year of conversion (unless that portion was already after-tax money in the traditional IRA). The conversion itself is not taxed; the income tax is owed because you're moving pre-tax money into a tax-free account. This is a one-time tax bill, not an ongoing tax.

No required minimum distributions in retirement

Unlike a traditional IRA, you are not required to take money out of a Roth IRA during your lifetime. You can let it grow tax-free for as long as you live. This makes a Roth useful for people who don't need the money in retirement or who want to leave the account to heirs.

Your beneficiaries will have to withdraw the money eventually—they have 10 years to empty the account after you die—but they won't owe income tax on those withdrawals if the account meets the five-year rule at the time of your death.

State taxes on Roth withdrawals

Most states do not tax Roth IRA withdrawals. However, a few states tax all retirement income, including Roth distributions. Check your state's tax rules or speak with a tax professional if you live in a state with an income tax and are planning large Roth withdrawals.

If you move to a different state in retirement, your Roth withdrawals are not taxed by your old state. Only your current state of residence can tax your income.

Frequently Asked Questions

Can I withdraw my contributions without paying taxes or penalties?

Yes. Contributions you deposited into your Roth IRA can be withdrawn at any time, at any age, tax-free and penalty-free. Only earnings are subject to the age and five-year restrictions. You can withdraw contributions even if the account hasn't been open five years.

What if I withdraw earnings before age 59½ but after five years?

If the account has been open five tax years but you're under 59½, you owe income tax on the earnings and a 10% early withdrawal penalty. The five-year rule and the age rule both have to be met to avoid taxes and penalties on earnings.

Do I have to report my Roth IRA on my tax return?

You don't report contributions or tax-free withdrawals. If you convert a traditional IRA to a Roth, you report the conversion and the income tax owed on Form 8606. If you withdraw earnings before 59½, you report the taxable portion and the penalty on your return.

What happens to my Roth IRA if I die?

Your beneficiaries inherit the account and can withdraw the money tax-free if the account has been open five tax years at the time of your death. They have 10 years to empty the account. If the account hasn't been open five years, they owe income tax on the earnings portion.