Your Roth IRA basis is the total amount of your own money you have put into the account

Basis is the sum of all contributions you have deposited into your Roth IRA from your own pocket. It does not include earnings, growth, or any money the account generated on its own. The IRS tracks this number because it determines what you can withdraw tax-free and penalty-free at any time.

Think of basis as your "cost" in the account. If you contributed $5,000 in year one and $6,000 in year two, your basis is $11,000. If that $11,000 grew to $18,000, your basis is still $11,000. The $7,000 in growth is separate from your basis and has different withdrawal rules.

This distinction matters because the Roth IRA's main advantage is tax-free withdrawals — but only for the right money at the right time. Knowing your basis tells you exactly how much of your account you can pull out without owing taxes or facing penalties, regardless of your age or how long the money has been in the account.

Key Takeaways

  • Your basis is every dollar of your own money you deposited into the Roth IRA, added up across all years.
  • You can withdraw your basis at any time, at any age, without taxes or penalties — this is one of the Roth IRA's core benefits.
  • Earnings (the money your investments made) are separate from basis and have stricter withdrawal rules.
  • The IRS does not automatically track your basis for you, so you must keep records of every contribution you made.
  • If you converted money from a traditional IRA to a Roth, that converted amount counts toward your basis but has a five-year holding period before you can withdraw it penalty-free.

How basis differs from earnings in your Roth IRA

Your Roth IRA holds two types of money: contributions (your basis) and earnings (the growth). The IRS treats them completely differently when you withdraw.

Contributions are always yours to take out. You paid taxes on that income when you earned it, so the IRS does not tax it again. You can withdraw your basis at age 20, age 50, or age 80 — the age does not matter. You can withdraw it after one year or after 30 years. There is no penalty, no tax, no waiting period.

Earnings are the investment gains, dividends, and interest your basis generated. Those earnings have never been taxed. If you withdraw earnings before age 59½, you owe income tax on them plus a 10% penalty — unless you meet a narrow exception like disability or a first-time home purchase (up to $10,000 lifetime). If you withdraw earnings after age 59½ and have held the Roth for at least five tax years, both the earnings and the withdrawal are tax-free.

The five-year rule applies to the account as a whole, not to each contribution. Once any Roth IRA you own has been open for five tax years, all future earnings withdrawals (if you are 59½ or older) are tax-free.

How to calculate and track your basis

The IRS does not send you a statement showing your basis. You must calculate and record it yourself. Start by listing every contribution you made, in order by year.

Regular contributions are straightforward: if you put $7,000 into your Roth in 2023 and $7,000 in 2024, your basis from regular contributions is $14,000. Catch-up contributions (an extra $1,000 per year if you are 50 or older) count the same way — they are part of your basis.

Conversions complicate the picture. If you converted $20,000 from a traditional IRA to a Roth, that $20,000 counts toward your basis. However, if part of that conversion was pre-tax money (money you never paid income tax on), you owe taxes on that portion in the year you convert. The converted amount still becomes part of your basis, but you cannot withdraw it penalty-free for five tax years — even though it is basis, not earnings.

Keep a simple spreadsheet or document with the year, the type of contribution (regular, catch-up, or conversion), and the amount. Add them all up. That total is your basis. Update it every time you contribute.

Why the IRS cares about your basis

The basis rule exists because the Roth IRA is a tax-free account, and the IRS wants to make sure you only get that benefit on money that deserves it. Your contributions were taxed when you earned them, so withdrawing them again tax-free is fair. Earnings, by contrast, have never been taxed, so the IRS wants to collect tax on them if you take them out early.

The basis rule also prevents people from disguising early withdrawals of earnings as withdrawals of contributions. Without the basis rule, someone could put $10,000 in, watch it grow to $15,000, withdraw $10,000, and claim it was all basis. The IRS would have no way to know whether they were pulling out contributions or earnings. The basis rule forces you to prove what you put in.

This is why record-keeping matters. If you cannot show the IRS what your basis is, the agency will assume any withdrawal is earnings first, which means you will owe tax and penalty on money that may actually have been your contribution.

What happens if you withdraw more than your basis

If you withdraw more money than your basis, the excess is treated as earnings. The tax and penalty rules for earnings apply.

Suppose your basis is $20,000 and your account balance is $30,000. You withdraw $25,000. The first $20,000 is basis and comes out tax-free and penalty-free. The remaining $5,000 is earnings. If you are under 59½, you owe income tax on that $5,000 plus a 10% penalty ($500). If you are 59½ or older and the account has been open five tax years, the $5,000 is also tax-free.

The IRS uses a "pro-rata" rule if you have multiple Roth IRAs or if you have both Roth and traditional IRAs. The rule treats all your IRAs as one account for withdrawal purposes. This prevents you from emptying a traditional IRA (which has mostly pre-tax money) while leaving a Roth IRA (which has mostly basis) untouched, then claiming all your Roth withdrawals are basis.

Conversions and the five-year rule for basis

When you convert money from a traditional IRA or a SEP IRA to a Roth, that converted amount becomes part of your basis. However, it is subject to a five-year holding period before you can withdraw it penalty-free.

The five-year rule for conversions is separate from the five-year rule for earnings. You can withdraw your regular contributions at any time. But if you converted $15,000 in 2024, you cannot withdraw that $15,000 penalty-free until 2029, even though it is basis. If you withdraw it before 2029 and you are under 59½, you owe a 10% penalty on the converted amount.

The tax on the conversion itself is paid in the year you convert, not when you withdraw. If your conversion included pre-tax money, you owe income tax on that portion when you file your return for the conversion year. The converted amount then sits in the Roth, growing tax-free, until the five years are up.

How to report your basis to the IRS

When you withdraw from your Roth IRA, your custodian (the bank, brokerage, or fund company holding the account) sends you a Form 1099-R showing the withdrawal amount. You report this on your tax return. The form does not break down how much was basis and how much was earnings — you have to do that.

If your withdrawal is only basis, you do not owe tax on it. You still report the withdrawal on your return, but you use Form 8606 (Nondeductible IRAs) to show the IRS that the money was basis and therefore not taxable. Form 8606 is also where you report conversions and track your basis across all your Roth accounts.

Keep copies of your contribution records and your Form 8606 filings. If the IRS ever questions a withdrawal, these documents prove what your basis was and whether you owed tax on the amount you took out.

Frequently Asked Questions

Can I withdraw my basis without paying a penalty before age 59½?

Yes. Your basis can be withdrawn at any age, at any time, with no penalty and no tax. This is one of the Roth IRA's biggest advantages. Earnings are different — those have a 10% penalty if you withdraw before 59½, unless you meet a narrow exception.

Does my basis include the money my investments earned?

No. Basis is only the money you deposited yourself. If you put in $10,000 and it grew to $15,000, your basis is $10,000. The $5,000 in growth is earnings and has different withdrawal rules.

What if I do not know how much I contributed over the years?

Contact your Roth IRA custodian and ask for a history of all contributions. They have records of every deposit you made. You can also check your own records — bank statements, brokerage confirmations, or tax returns showing IRA contributions. Add them up by year to find your total basis.

If I converted a traditional IRA to a Roth, is that conversion part of my basis?

Yes, the converted amount is part of your basis. However, you cannot withdraw it penalty-free for five tax years, even though it is basis. Regular contributions have no such waiting period — you can withdraw those anytime.

Do I need to report my basis withdrawal on my tax return?

You report the withdrawal itself on Form 1099-R from your custodian, but you use Form 8606 to show the IRS that the amount was basis and therefore not taxable. File Form 8606 with your return so the IRS knows you do not owe tax on that withdrawal.