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What is the five-year rule for Roth IRAs?

The five-year rule determines when Roth IRA earnings can be withdrawn tax-free. To take a qualified distribution of earnings, at least five tax years must have passed since your first Roth IRA contribution, and you must meet an additional requirement such as reaching age 59 and one-half or qualifying under an IRS exception.

The five-year clock begins on January 1 of the tax year for which you made your first Roth IRA contribution, even if the contribution is made later in the year. This means starting early can be beneficial, even with a small initial contribution.

There is also a separate five-year rule for Roth conversions, which affects whether converted amounts are subject to penalties if withdrawn early. Because multiple timing rules apply, understanding the five-year rule helps ensure withdrawals remain tax-free and penalty-free.