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How to Make Early Roth IRA Withdrawals

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 [1] many years ago. Now that my husband is quitting the rat race [2], 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! [3]

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 [4] 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 [5] 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 Money placed in a Roth IRA from a traditional IRA to Roth IRA conversion [6] can be withdrawn tax free and penalty free after five years.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 [5] 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 [7], your withdrawal will be tax free and penalty free. Some of these nontaxable conversions are referred to as a Backdoor Roth IRA [8]. 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