How to Make Early Roth IRA Withdrawals

Posted by Madison on May 27, 2015

The ability to use early Roth IRA withdrawals is an integral part of any early retirement plan. Roth IRAs allow for much more flexibility when it comes to early withdrawals than a traditional IRA.

We’ve integrated the option to use retirement funds since I left my corporate job many years ago. Now that my husband is quitting the rat race, it’s a good opportunity to review the early withdrawal options in a Roth IRA.

Here are the options on how to access Roth IRA funds before a traditional retirement age.

Roth IRA Withdrawals

It’s easy to get confused when you can withdraw money from your Roth IRA. Is it after 5 years? Is it at age 59.5? Is it anytime?

You can withdraw your contributions at any time. No tax and no penalty! Keep a spreadsheet of how much you contribute each year so you know the total value of your contributions. If you make a withdrawal, it is considered to come out of your contributions first (which is different from a traditional IRA). For more, see How to Track Your Roth IRA Contributions… and Why You Need To!

You can make a qualified withdrawal of earnings after five years. The five year clock begins on January 1st of the tax year of your first contribution. For example, if you opened your Roth IRA for the tax year 2015, the five year test will be satisfied on January 1, 2020.

The 5 year period starts with the year that you made your initial contribution, Roth IRA Conversion or rollover. Once the 5 years have elapsed, it is complete for all your Roth IRA contributions.

In addition you must meet one of the qualified distribution reasons:

  1. Withdrawals at age 59.5.
  2. Withdrawals for your beneficiary after you die.
  3. Withdrawals if you become disabled.
  4. Withdrawals for first time homebuyers.

Beyond the qualified distributions above, there are a few more exceptions that may qualify you for an exemption from the 10% early distribution penalties including:

  • Withdrawals for qualified higher education expenses.
  • Withdrawals for unreimbursed medical expenses (limits apply).
  • Withdrawals for medical insurance premiums during unemployment.
  • Withdrawals for a series of substantially equal payments (SEPP).

You can withdraw taxable conversions after five years. Money placed in a Roth IRA from a traditional IRA to Roth IRA conversion can be withdrawn tax free and penalty free after five years. Conversions made in different tax years will have to satisfy a separate 5 year period.

Converted Roth IRAs that are withdrawn before the 5 years elapses could have the 10% early penalty applied. This is an exception to the above rule that uses one 5 year time period to satisfy all Roth IRAs.

You can withdraw nontaxable conversions at any time. If you converted money from a traditional IRA to a Roth IRA, without taking a deduction at the time of the contribution to the traditional IRA, your withdrawal will be tax free and penalty free. Some of these nontaxable conversions are referred to as a Backdoor Roth IRA. However, even though these withdrawals are tax free, the ordering rules below will apply.

Order of Roth IRA Withdrawals

There are multiple ways above to access your Roth IRA tax free and penalty free. However, you must make withdrawals in a predetermined order. All your Roth IRAs are considered as one Roth IRA for the withdrawal order. The order is:

  1. Regular Roth IRA contributions.
  2. Taxable rollover conversions (on first-in first-out basis).
  3. Nontaxable rollover conversions.
  4. Repeat of steps 2 & 3 for each conversion (grouped by year).
  5. Earnings.


I have explained the withdrawals here as part of a plan to access funds for early retirement…. I don’t recommend tapping your retirement funds for other purposes! In addition, using Roth IRA retirement funds for early retirement should only be done as part of an overall withdrawal plan that is sustainable for your lifetime.

More on Roth IRAs

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Comments to How to Make Early Roth IRA Withdrawals

  1. Interesting…I knew about the ability to withdraw contributions, but never really understood eligibility on withdrawing earnings.

    Question, if someone if planning to retire well in advance of the 59 1/2 retirement age, would you recommend investing in taxable funds, or invest in a Roth and then withdraw contributions when time to “retire?”

    Frugal Dad

  2. Even in India there is a particular eligibility on withdrawing earning. knew it, but well described, very nice article.


  3. I’m leaving mine in place until I really need it. Hopefully that won’t happen until MUCH later in my career.


  4. It is such a great article. Had fun reading it. For those who are new to the idea of IRA it is an investing tool used by individuals to earn and earmark funds for retirement savings. There are several types of IRAs: Traditional IRAs, Roth IRAs, SIMPLE IRAs and SEP IRAs.


  5. @ Frugal Dad: I’m always in favor of a Roth. You can’t beat tax free. Even if you want to withdraw more than the contributions, you can do so with a 72t distribution. You can avoid the penalties that way.


  6. @Madison – I disagree with your statement about not being able to beat a Roth. While yes, if you want a traditional retirement account and all things that the government thinks are true about you, then yes, it makes sense. I however, plan on retiring by 45 (I am 37). I don’t have the life expectancy to hit 65 probably with my health issues, so struggling to 59.5 might be pushing it to get access to my Roth (yeah I can take it out for medical expenses, but that is all unless I do a SEPP which the government thinks I will live to 90 so they are way off there). Yes a Roth is tax free, and I have contributed to it over the years, the tax benefits go away after certain incomes (which I am single, so therefore it is lowered for me vs you), and really who cares. I have a traditional account with 5 times the amount I have in my IRA waiting for me which is liquid, and ready for me to have access to for my retirement.

    I am not disagreeing with your statements about them being good vehicles, I just think that at the end of the day, you have to say “if the fundamental rules our government created apply to you”. They don’t for me, so therefore I don’t utilize them much as it will be hard to get access to without taking additional tax hits which is the point of having the account.


    • Big-D,
      Thanks for your thoughts! You have a really good point. I have always based my assumptions about funding my own accounts, including my Roth IRAs, on living a long time.
      If you know your life expectancy is different (which I’m saddened to hear, because I always love when you comment), it changes all the rules.
      There really should be a way that you could alter the IRS life expectancy and withdraw accordingly. Obviously, that would open up another bunch of issues, but it would make sense for you, and many other people facing the same issue.
      So I stand corrected… Roth IRAs are great vehicles IF the fundamental rules governing the Roth IRAs apply!


      • @Madison – Don’t write me off yet. I have a few issues and a long family history which I am using as my guide. I plan on living a while, but living to 70 would be something I wouldn’t expect.

        I agree, I wish they would change the SEPP or other mandatory distributions based on current actuarial tables versus general census data.

        BTW – I was not trying to take away from your article, but I am an logical individual by trade, and as such, I make sure that statements are as factual as possible, thus the reason for my response. When I am at work, I generally am the person who brings up the stuff that can happen in 2% of the time so that we can plan or at least know they are on the radar. Some people call me the ultimate devil’s advocate. It is not that I try to be difficult, just want to know all the angles before I make a decision 🙂


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