Vanguard explains the rules for withdrawing from a traditional or Roth IRA, including age requirements, penalties, and exceptions.
IRA withdrawal rules: What you need to know
Key takeaways
- Withdrawals taken before age 59½ are generally subject to taxes and a penalty.
- After age 59½, you can withdraw funds from both traditional and Roth IRAs without a penalty, though taxes apply to some withdrawals.
- Traditional IRA owners must start taking required minimum distributions (RMDs) after turning 73, while Roth IRAs don't have RMD requirements.
IRA withdrawal basics
Traditional and Roth IRAs are individual retirement accounts designed to help you save for retirement. They provide flexible options for retirement savings, with different tax benefits and withdrawal rules for Roth and traditional IRAs.
A traditional IRA features tax-deductible contributions that grow tax-deferred, meaning taxes are paid when funds are withdrawn.
A Roth IRA involves contributions made with after-tax dollars, but withdrawals of both contributions and earnings are tax-free, provided certain conditions are met.
Early withdrawals—those taken before age 59½—are typically subject to a 10% penalty. Early withdrawals from either type of IRA can be made penalty-free under certain circumstances, such as for first-time home purchases or due to disability. Once you reach age 59½, withdrawals from both types of IRA are penalty-free, though withdrawals may still be subject to taxes. Traditional IRA owners must start taking required minimum distributions (RMDs) after turning 73, while Roth IRAs have no RMD requirements.
Roth IRA withdrawal rules
- Contributions versus earnings: Contributions are the funds you deposit into the IRA, while earnings are the profits or income generated from the investments within the account. Contributions to a Roth IRA can be withdrawn at any time without taxes or penalties, but earnings are subject to different rules.
- Withdrawals before age 59½: While Roth IRA contributions can be withdrawn without taxes or penalties, earnings withdrawn before age 59½ are generally subject to taxes and a 10% federal penalty. In certain cases, the penalty can be waived.
- Withdrawals after age 59½: Once you reach age 59½, you can withdraw both contributions and earnings from a Roth IRA tax- and penalty-free, provided the account has been open for at least 5 years. (If you're withdrawing only your contributions, the 5-year rule doesn't apply.)
- The 5-year rule: Earnings withdrawn before you've held the account for 5 years will be taxed and, if you're under 59½, subject to a 10% penalty, unless an exception applies. The 5-year period begins on January 1 of the tax year in which you made your first Roth IRA contribution. For those under 59½, each conversion from a traditional IRA has its own separate 5-year period before earnings can be withdrawn tax-free.
- Required minimum distributions: Unlike traditional IRAs, Roth IRAs don't require you to take RMDs during your lifetime. This allows the account to continue growing tax-free, potentially benefiting you or your beneficiaries.
Save for the future you want
Traditional IRA withdrawal rules by age
| Age range | Withdrawal rules |
|---|---|
| Before 59½ | Early withdrawals are generally subject to a 10% early withdrawal penalty in addition to regular income tax. There are exceptions to the penalty. Examples include first-time home purchases, higher education expenses, or certain medical expenses, among others. |
| After 59½ | Withdrawals are not subject to the 10% federal penalty tax but are still subject to regular income tax. |
| After age 73 | Traditional IRA owners must begin taking required minimum distributions (RMDs) by April 1 of the year following the year they turn 73, and then annually by December 31. RMDs are taxed as ordinary income. Failure to take an RMD by the appropriate deadline could result in IRS penalties. |
For more detailed information, refer to IRS Publication 590-B.
Exceptions to the 10% IRA withdrawal penalty
Withdrawals of both contributions and earnings from a traditional IRA before age 59½ are subject to a 10% penalty unless you meet an exception listed below (this list isn't comprehensive). These exceptions also apply to any taxable amount of Roth IRA withdrawals. Please note that Vanguard doesn't determine exception eligibility.
- The IRA owner is totally and permanently disabled.
- The withdrawal is made to a beneficiary or the IRA owner's estate after the owner's death.
- The withdrawal is made to certain distributions to qualified military reservists called to active duty.
Or if the withdrawal is used for:
- A first-time home purchase ($10,000 lifetime limit).
- Postsecondary education expenses.
- Substantially equal periodic payments taken under IRS guidelines.
- Certain unreimbursed medical expenses.
- An IRS levy on the IRA.
- Health insurance premiums (after you've received at least 12 consecutive weeks of unemployment compensation).
- Birth or adoption of a child (up to $5,000 per child distributed within 1 year of birth or adoption).
For additional information about Roth and traditional IRA withdrawal rules, consult a qualified tax professional or IRS Publication 590-B.
RMD withdrawal rules
If you're the original account owner of a Roth IRA, there's no mandatory withdrawal at any age. But if you own a traditional IRA, you must take your first required minimum distribution (RMD) by April 1 of the year following the year you reach age 73. For each subsequent year, you must take your RMD by December 31. The RMD amount is based on your life expectancy and the prior year-end balance of your retirement account.
Inherited IRA withdrawal rules
Understanding inherited IRA distribution rules is crucial for managing the tax and financial implications of inheriting an IRA. For more detailed guidance, consult IRS Publication 590-B. Inherited IRA RMDs can be complicated. Calculate the estimated required minimum distribution from your inherited IRA using our step-by-step guide.
Can I withdraw from my Roth IRA?
You can withdraw your contributions from a Roth IRA at any time without incurring taxes or penalties. This is because contributions are made with after-tax dollars. However, withdrawals that include earnings may be subject to taxes and penalties unless they meet specific conditions, such as the account having met the 5-year rule and the withdrawal being made after age 59½. Withdrawals of earnings before age 59½ may be exempt from taxes and penalties if they are taken due to disability, the account owner's death, or for a first-time home purchase.
When can you withdraw from a Roth IRA?
Anytime, but Roth IRA withdrawals are governed by specific rules that determine whether the funds are subject to taxes or penalties. Wondering when you can withdraw from a Roth IRA? Here's a breakdown of when you can withdraw contributions and earnings from your Roth IRA without taxes or penalties:
Contributions withdrawal
Withdrawals of Roth IRA contributions are always tax-free and penalty-free. This is because contributions are made with after-tax dollars, so you've already paid taxes on them.
Earnings withdrawal
Earnings can be distributed tax- and penalty-free if the individual has held a Roth IRA for at least 5 years and one of the following is true:
- 59½ or older: You're at least 59½ years old.
- Disability: The distribution is due to your disability.
- Death: The distribution is made to your beneficiary after your death.
- First-time home purchase: The distribution is used for a first-time home purchase, up to a lifetime limit of $10,000.
For more detailed information, refer to IRS Publication 590-B.
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How the 5-year rule affects Roth IRA withdrawals
Contribution and withdrawal timeline
The 5-year rule is a critical factor in determining whether earnings from a Roth IRA can be withdrawn tax-free. Here's a table that illustrates how different scenarios can affect the application of the 5-year rule and the associated tax and penalty consequences:
| Tax year of first contribution | Withdrawal year | Over age 59½? | Tax/Penalty applied (penalty only applied if under 59½) |
|---|---|---|---|
| 2024 | 2027 |
Yes |
Earnings are taxable. |
| 2022 | 2028 | Yes | Earnings are tax-free. |
| 2024 | 2027 | No | Earnings are taxable and may incur a 10% penalty unless certain conditions are met. |
| 2021 | 2028 | No | Earnings are taxed unless due to death, disability, or first-time home purchase ($10,000 lifetime limit) and may incur a 10% penalty unless certain conditions are met. |
Tax year of first contribution Withdrawal year Over age 59½? Tax/Penalty applied (penalty only applied if under 59½) |
Tax year of first contribution Withdrawal year Over age 59½? Tax/Penalty applied (penalty only applied if under 59½) |
Tax year of first contribution Withdrawal year Over age 59½? Tax/Penalty applied (penalty only applied if under 59½) |
Tax year of first contribution Withdrawal year Over age 59½? Tax/Penalty applied (penalty only applied if under 59½) |
Roth conversions and the 5-year rule
There is a separate 5-year period for each conversion from a traditional IRA to a Roth IRA. If the 5-year rule is not met, you may incur a 10% penalty on the conversion amount unless you're 59½ or the distribution is due to death, disability, or first-time home purchase (up to $10,000 lifetime limit). Earnings on conversions follow the same earnings rules as other Roth IRA withdrawals.
When do you pay taxes on IRA withdrawals?
Taxes on IRA withdrawals are due in the following scenarios:
- Traditional IRA: Withdrawals are taxable because contributions were made with pre-tax dollars.
- Early withdrawals from a traditional IRA: Any withdrawals from a traditional IRA before age 59½ are generally taxable and may also incur a 10% early withdrawal penalty, unless an exception applies.
- Roth IRA: Withdrawals of earnings are taxable if the account hasn't been open for at least 5 years or if you're under 59½, with certain exceptions. Those under 59½ may also be subject to a 10% penalty.
- Inherited traditional IRA: Generally, beneficiaries will pay taxes on their withdrawals.
Can I take out a loan from my IRA?
Neither Roth nor traditional IRAs allow you to take loans, but you can access money from an IRA for a 60-day period through a "tax-free rollover" if you put the money back into the same or a different IRA within 60 days. You're limited to only one such "rollover" within a 12-month period, regardless of the number of IRAs you own. If you have taxes withheld from the distribution from your traditional IRA, you would have to use other funds to roll over the full amount of the distribution.