5-Year Rule #1: For Earnings to Come Out Tax-Free

This rule applies to the EARNINGS in your Roth IRA. To take earnings out tax-free (as a 'qualified distribution'), two conditions must both be true: (1) Your Roth IRA must have existed for at least 5 years (counted from January 1 of the year of your first EVER Roth IRA contribution — to any Roth IRA), AND (2) You must be age 59½ or older (or meet another qualifying exception: death, disability, or $10,000 first-time homebuyer).

ℹ️The 5-Year Clock Is Universal Across All Roth IRAs

Your 5-year clock for earnings starts with your very first Roth IRA contribution — to any Roth IRA — and all your subsequent Roth IRAs (at different brokers, for example) use the same starting date. You do not get a separate 5-year clock for each Roth IRA account you open. One clock rules them all.

5-Year Rule #2: For Conversions Before Age 59½

This separate 5-year rule applies specifically to Roth IRA CONVERSION amounts. If you convert Traditional IRA funds to Roth IRA, each converted amount has its own separate 5-year clock. If you are under 59½ and withdraw conversion amounts within 5 years of that conversion, the taxable portion of the conversion is subject to the 10% early withdrawal penalty (even though you already paid income tax on the conversion).

Each Roth IRA conversion has its own 5-year window

Conversion YearPenalty-Free Withdrawal DateExample
2022 conversionJanuary 1, 2027Converted in 2022; withdraw penalty-free after 1/1/2027
2023 conversionJanuary 1, 2028Each conversion has its own separate 5-year window
2024 conversionJanuary 1, 2029Conversions done in different years have different clocks
2025 conversionJanuary 1, 2030Once age 59½, this rule no longer matters

When These Rules Actually Matter

  • If you opened your first Roth IRA today and are 58 years old: you cannot take earnings tax-free until age 62 (wait for the 5-year rule), even though you are past 59½
  • If you converted IRA funds to Roth at age 55 and need the money at 57: you would owe the 10% penalty on the taxable portion of the conversion
  • If you have been contributing to a Roth IRA since age 30 and are now 35 and 59½: you are clear on both rules — take anything you want tax and penalty-free
  • If you are 65 and open your first Roth IRA: you must wait 5 years before taking EARNINGS tax-free (but contributions are always accessible)

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