When You Withdraw From a Roth IRA, What Gets Taxed

Roth IRA withdrawals are tax-free if you follow the rules

The short answer: your Roth IRA withdrawals are not taxed if you are at least 59½ years old and have held the account for at least five tax years. If you withdraw before meeting both conditions, the earnings portion gets taxed as ordinary income, and you may owe a 10 percent early withdrawal penalty. Your contributions themselves come out tax-free no matter when you withdraw them.

The tax treatment depends on what you are pulling out—contributions or earnings—and when you pull it out. The IRS treats these two parts differently, which is why some Roth withdrawals are taxable and others are not.

Key Takeaways

• Contributions to your Roth IRA come out tax-free at any time, because you already paid taxes on that money when you earned it.
• Earnings on your contributions are tax-free only if you are 59½ or older and the account has been open for at least five tax years.
• If you withdraw earnings before age 59½ or before the five-year mark, those earnings are taxed as ordinary income plus a 10 percent penalty in most cases.
• The IRS uses a specific ordering rule: contributions come out first, then conversions, then earnings—so you know which part is taxable.
• Certain exceptions let you withdraw earnings without penalty before 59½, such as for a first home purchase or may have access to education expenses.

Contributions always come out tax-free

Your contributions—the money you put into the Roth IRA from your own paycheck—are never taxed when you withdraw them. You already paid income tax on that money in the year you earned it. The IRS does not tax it again.

This is true whether you withdraw contributions at age 30, age 59½, or age 80. It does not matter how long the money has been in the account. You can pull out your contributions whenever you need them without any tax bill or penalty.

The catch is that the IRS needs to know which dollars are contributions and which are earnings. You track this through your Roth IRA statements and your own records. If you have made contributions over several years, the IRS assumes you withdraw contributions first, in the order you made them.

Earnings are taxable before age 59½ or before five years

The earnings—the investment gains your money has made inside the account—are treated as taxable income if you withdraw them before you turn 59½ or before the account has been open for five tax years. Whichever condition you fail to meet triggers the tax.

If you withdraw $50,000 in earnings at age 45, and your account is only three years old, that $50,000 is taxed as ordinary income at your regular tax rate. You also owe a 10 percent early withdrawal penalty, which is $5,000 in this example. The penalty is calculated on the earnings portion only, not on your contributions.

The five-year rule is tied to the tax year you opened the account, not the calendar date. If you opened your Roth IRA on December 15, 2023, the five-year period ends on December 31, 2028. After that date, you can withdraw earnings tax-free as long as you are 59½.

How the IRS orders your withdrawals

When you take money out of a Roth IRA, the IRS assumes you withdraw it in this order: contributions first, then conversions, then earnings. This matters because it tells you which part of your withdrawal is taxable.

Suppose you have contributed $30,000 over five years, converted $20,000 from a traditional IRA, and your account has grown to $65,000. If you withdraw $40,000 at age 50, the IRS treats it as $30,000 in contributions (tax-free) plus $10,000 in conversions (potentially taxable, depending on the conversion rules). Your earnings stay in the account untouched for now.

This ordering rule protects you: you can access your own contributions without triggering tax on the gains. But it also means you cannot cherry-pick which dollars to withdraw. The order is fixed by law.

Exceptions that let you withdraw earnings without penalty

The IRS allows you to withdraw earnings before age 59½ without the 10 percent penalty in specific situations. The earnings are still taxed as ordinary income, but you avoid the penalty. These exceptions include:

• A first-time home purchase (up to $10,000 lifetime)
• may have access to education expenses for you or a family member
• Medical expenses that exceed 7.5 percent of your adjusted gross income
• Health insurance premiums while you are unemployed
• A permanent disability or medical condition
• Distributions to your beneficiary after your death

Even with these exceptions, the earnings portion is still taxed. You just do not pay the 10 percent penalty. If you withdraw $15,000 in earnings for a first home and you are in the 22 percent tax bracket, you owe $3,300 in income tax but no penalty.

Roth conversions have their own five-year rule

If you have converted money from a traditional IRA or 401(k) into your Roth IRA, those converted funds follow a different five-year rule than your regular contributions. Each conversion has its own five-year clock.

When you convert $50,000 in 2024, that $50,000 is subject to a five-year rule that runs through 2029. If you withdraw that specific $50,000 before 2029 and before age 59½, you owe the 10 percent penalty on it. Conversions made in different years have different five-year periods.

The converted amount itself (the principal you moved over) is not taxed again—you already paid tax on it when you converted. But the earnings on that conversion are taxed if withdrawn early. This is why tracking each conversion separately matters for your records.

What happens if you withdraw before the five-year mark

If your Roth IRA is less than five years old and you withdraw earnings, you owe income tax on those earnings plus a 10 percent penalty. The tax rate depends on your tax bracket for that year.

Example: You opened a Roth IRA in 2023 and contributed $7,000. By 2024, it has grown to $8,500. You withdraw $8,500 at age 50. The first $7,000 is your contribution and comes out tax-free. The remaining $1,500 is earnings. Because the account is less than five years old, that $1,500 is taxed as ordinary income, and you owe a $150 penalty (10 percent of $1,500). If you are in the 24 percent bracket, you owe $360 in income tax plus $150 in penalty, for a total of $510.

The penalty does not apply if one of the exceptions listed above applies to your withdrawal. But the income tax on the earnings still does.

Frequently Asked Questions

Can I withdraw my contributions without reporting it to the IRS?

You do not owe tax on contributions, but you still need to report the withdrawal on your tax return using Form 8606. This form tells the IRS which part of your withdrawal was contributions (tax-free) and which part was earnings (potentially taxable). Even though contributions are not taxed, filing the form keeps your records straight with the IRS.

What if I do not know how much of my withdrawal is earnings versus contributions?

Your Roth IRA custodian (the bank or brokerage holding your account) can give you a breakdown of contributions and earnings. Request a statement showing your cost basis—the total amount you have contributed over the life of the account. Subtract that from your current balance to find your earnings. Keep these records for your tax return.

Do I have to withdraw money from my Roth IRA at any age?

No. Unlike traditional IRAs, Roth IRAs have no required minimum distributions during your lifetime. You can leave the money in the account as long as you want, and all withdrawals remain tax-free as long as you follow the rules. Your beneficiary will inherit the account with tax-free withdrawal rights as well.

If I convert a traditional IRA to a Roth, do I pay tax on the conversion?

Yes. When you convert, you owe income tax on the amount converted in that tax year. The conversion itself is taxable, but once the money is in the Roth, future withdrawals of that converted amount are tax-free (after five years and age 59½). This is why conversions are a separate category with their own five-year rule.

What if I withdraw earnings by mistake before age 59½?

You owe income tax and the 10 percent penalty on the earnings portion. You can file an amended return if you realize the mistake, but the tax and penalty are still due unless an exception applies. Some custodians allow you to redeposit the withdrawal within 60 days to undo it, which can help if you act quickly.