Roth IRA Withdrawal Rules & Penalties

Having a Roth IRA account in place for retirement is a responsible plan for the future. After all, you wouldn’t want to worry about your financial security when you’ve finally reached an age to enjoy the fruits of your labor.

If you’re contributing to this type of retirement account, you might be wondering what Roth IRA withdrawal rules are in place. Luckily, tax experts are available to help answer any questions along the way, especially with a topic so complex. 

You can withdraw your contributions anytime tax- and penalty-free, but you must meet certain Roth IRA rules to withdraw your earnings tax- and penalty-free. Use this guide to learn more about the withdrawal rules for Roth IRAs.

Some key takeaways for a Roth IRA withdrawal include:

• Roth IRA distributions on contributions can be taken at any time, both tax- and penalty-free.
• Roth IRA distributions on earnings can be taken both tax- and penalty-free when:
  • Your Roth IRA account has been open for five years, and
  • You meet one of the following requirements:
    • You must be at least 59 1⁄2 years old.
    • You are disabled.
    • You are the beneficiary of a deceased Roth IRA account owner.
    • You meet the requirements for buying your first home (up to a $10,000 lifetime limit).
• The taxes and penalties might be avoided during certain situations, including purchasing your first home, birth or adoption, or covering college education expenses. 

Keep reading to learn more about the Roth IRA retirement account, including detailed information on withdrawals and certain limits on contributions.

Are you allowed to withdraw Roth IRA contributions?

Yes, you can withdraw contributions that have been made to your Roth IRA at any time, both tax- and penalty-free. Therefore, it is important to keep track of your past contributions and withdrawals. TurboTax can help you keep track of these net contributions when you file your return.

Roth IRA Contributions and Earnings

It’s important to make this distinction when talking about Roth IRA withdrawal rules: You can withdraw contributions that have been made to your Roth IRA at any time, both tax- and penalty-free. However, depending on when you withdraw your Roth IRA earnings, you might have to pay taxes and penalties. 

What are qualified vs. nonqualified distributions?

Qualified and nonqualified distributions determine whether there are taxes and penalties when you withdraw earnings from your Roth IRA. 

Qualified distributions from a Roth IRA are not included in your gross income and therefore tax-free. To count as a qualified Roth IRA distributions, your Roth IRA must be at least 5 years old and meet one of the following requirements:

• You must be at least 59 1⁄2 years old.
• You are disabled.
• You are the beneficiary of a deceased Roth IRA account owner.
• You meet the requirements for buying your first home (up to a $10,000 lifetime limit).

Earnings from a non-qualified Roth IRA distribution must be included in your taxable income, and you are also subject to the 10% tax on early distributions unless you qualify for an exception.    

What are the Roth IRA withdrawal rules?

Before withdrawing from a Roth account, it’s necessary to understand the rules and limitations associated with distributions. The distribution of Contributions and Qualified distributions are both tax and penalty-free, while non-qualified distributions of earnings will incur taxes and penalties depending on different factors. 

When you take money out of your Roth IRA, there is a fixed order in which funds are considered to be distributed. The order is as follows:

1. Regular contributions.
2. Conversion and rollover contributions, on a first-in, first-out basis.
3. Earnings on contributions.

Roth IRA five-year rule

• With a Roth IRA account, there are two requirements that must be met if you wish to withdraw your earnings without owing any taxes and penalties: You must satisfy the five-year rule and
• You must meet at least one of the following conditions:
  • You are 59 1⁄2 or older.
  • You are disabled.
  • The distribution is made to a beneficiary or the estate of the deceased Roth IRA owner.
  • You meet the requirements for buying your first home (up to a $10,000$ lifetime limit).

So, what exactly is the five-year rule? This rule states that there must be five years between the time you make your first contribution and the time  you withdraw your earnings. This rule applies regardless of age, even if you were to hit the age of 59.5 in the meantime. 

If you choose to withdraw your Roth IRA earnings before you’ve satisfied this five-year rule, expect to pay income taxes on the withdrawal. You will also incur a 10% early-withdrawal penalty unless you meet an exception to that penalty. 

Are there exceptions to the early distribution penalty on an IRA?

There are exceptions to the 10% tax penalty for early distributions:

• You have reached the age of 59 1⁄2.
• You are totally and permanently disabled.
• You have been certified as having a terminal illness.
• You are the beneficiary of a deceased IRA owner.
• You use the distribution to buy, build, or rebuild a first home up to $10,000.
• The distributions are part of a series of substantially equal payments.
• You have unreimbursed medical expenses that are more than 7.5% of your AGI (defined earlier) for the year.
• You are paying medical insurance premiums during a period of unemployment.
• The distribution is a corrective distribution.
• The distributions are for your qualified higher education expenses.
• The distribution is due to an IRS levy of the IRA or retirement plan.
• The distribution is a qualified reservist distribution.
• The distribution is a qualified birth or adoption distribution up to $5,000.
• The distribution is a qualified disaster distribution or qualified disaster recovery distribution up to $22,000.
• The distribution is to a domestic abuse victim up to the lesser of $10,000 or 50% of the account.
• The distribution is for certain emergency personal expenses up to $1,000.

Roth IRA contribution limits

The annual amount that you’re allowed to contribute to your Roth IRA is limited by the income that you earn. The annual IRA contribution limit is $7,000 for 2025; this changes to $8,000 if you’re 50 or older. For 2026, the IRA contribution limit is $7,500 (or $8,600 if you are 50 or older). In other words, your contributions to your Traditional and Roth IRA accounts can’t exceed this annual IRA contribution limit. 

Roth IRA income limits

Similarly to the contribution limits, certain limits on income exist with regard to a Roth IRA account. 

• If you’re a single filer or head of household: Your Modified Adjusted Gross Income (MAGI) must be less than $165,000 in 2025 ($168,000 in 2026).
• If you’re a joint filer: Your MAGI must be less than  $246,000 in 2025 ($252,000 in 2026).
• If you’re married filing separately, and lived with your spouse: Your MAGI must be less than $10,000 in 2025 and 2026.

So, what do these numbers mean? If your income exceeds the upper limit, you can’t contribute to a Roth IRA account. As the amount of money you make increases, your maximum contribution amount decreases.

Below is additional information on how the limits for 2025 and 2026 are calculated:

• Single or head of household filing status:
  • 2025 MAGI: less than $150,000
    • Maximum annual contribution: $7,000 (or $8,000 if age 50 or older) 
  • 2026 MAGI: less than $153,000
    • Maximum annual contribution: $7,500 (or $8,600 if age 50 or older) 
  • 2025 MAGI: $150,000 to $164,999
    • Maximum annual contribution: Reduced
  • 2026 MAGI: $153,000 to $167,999
    • Maximum annual contribution: Reduced
  • 2025 MAGI: $165,000 or more
    • No contribution allowed 
  • 2026 MAGI: $168,000 or more
    • No contribution allowed 
• Married filing jointly or qualifying widower filing status:
  • 2025 MAGI: less than $236,000
    • Maximum annual contribution $7,000 ($8,000 if age 50 or older)
  • 2026 MAGI: less than $242,000
    • Maximum annual contribution $7,500 ($8,600 if age 50 or older)
  • 2025 MAGI: $236,000 to $245,999
    • Maximum annual contribution: Reduced
  • 2026 MAGI: $242,000 to $251,999
    • Maximum annual contribution: Reduced
  • 2025 MAGI: $246,000 or more
    • No contribution allowed 
  • 2026 MAGI: $252,000 or more
    • No contribution allowed 

As you can see, Roth IRA accounts typically favor those in a lower income bracket, as they can contribute the most. As you climb the income bracket level, the amount that you can contribute evens out to zero. 

You can avoid the Roth IRA income limits by using the Backdoor Roth conversion. This involves making nondeductible Traditional IRA contributions and then converting them to a Roth IRA.

Important: The Backdoor Roth conversion only works cleanly (i.e., tax-free) if you have no pre-tax funds in any of your Traditional, SEP, or SIMPLE IRAs. Otherwise, the IRS Pro-Rata Rule will make a portion of your conversion taxable. 

Pros and cons of taking a Roth IRA withdrawal

While it might be tempting to take a Roth IRA withdrawal, ideally, you should wait to withdraw until retirement. At this point, you’ve likely satisfied both the five-year rule and the minimum age of 59 1⁄2. After all, the longer you wait, the more you can maximize your overall contributions and earnings. This provides you with more money for the future without paying any potential penalties. 

If there’s a situation where you need to withdraw from your Roth IRA, it’s best to consider the pros and cons first. By withdrawing your Roth IRA, you can avoid paying interest on a loan. This saves you money in the long run.

In addition, you can always take out your contributions both tax and penalty-free and, in some cases, withdraw your earnings penalty-free as well. This may provide you with immediate cash relief when you need it the most. 

Before withdrawing, however, it’s important to understand the potential drawbacks. First, since the withdrawn money can’t be repaid to the account, you permanently miss out on future tax-free growth. In addition, withdrawing your earnings as part of an unqualified distribution, will incur income taxes and a 10% penalty. Lastly, and maybe most importantly, any money you withdraw now won’t be available to you later in life when you retire. This might make this situation financially difficult for you.

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

Qualified distributions, and the withdrawal of Roth IRA contributions are reported on Line 4a of Form 1040. But the taxable amount reported on Line 4b is zero ($0) because these are nontaxable distributions.  However, if you receive a nonqualified distribution from your Roth IRA, you will have a taxable amount reported on line 4b. Alleviate stress with tax help

Understanding Roth IRA withdrawal rules doesn’t have to be a difficult process. Meet with a TurboTax Full Service expert who can prepare, sign, and file your taxes. That way, you can be 100% confident your taxes are done right.

No matter what moves you made last year, TurboTax will make them count on your taxes. Whether you want to do your taxes yourself or have a TurboTax expert file for you, we’ll make sure you get every dollar you deserve and your biggest possible refund – guaranteed.

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