Can you withdraw a roth ira early

Living in retirement

IRA rules for RMDs & other withdrawals

While you can take money from your IRA anytime, you may bypass penalties and extra taxes if you don't do it too early.

Guidelines for withdrawals

Withdrawals before age 59½

Withdrawals of Roth IRA contributions are always both tax-free and penalty-free. But if you're under age 59½ and your withdrawal dips into your earnings—in other words, if you withdraw more than you've contributed in total—you could be subject to both taxes and penalties on the earnings portion of the withdrawal.

Withdrawals of your traditional IRA contributions before age 59½ will result in a 10% federal penalty tax plus regular income tax on the taxable amount of your withdrawal—generally the entire amount—unless you qualify for an exception.

See if you qualify for an exception

Withdrawals between ages 59½ & 72 (age 70½ if you attained age 70½ before 2020)

Restrictions relax at age 59½, and you can withdraw from a Roth or traditional IRA penalty-free for the most part.

In addition, with a Roth IRA, you'll pay no taxes on withdrawals, provided your account has been open for at least 5 years.*

With a traditional IRA, you'll owe taxes on the withdrawals of all earnings and any contributions you originally deducted from your taxes.

But remember: Turning 59½ doesn't mean you have to start withdrawing your money.

Withdrawals at age 72 (age 70½ if you attained age 70½ before 2020) & older

If you own 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 72 (age 70½ if you attained age 70½ before 2020). 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.

Learn about Vanguard's free RMD Service

Withdrawals from an inherited IRA

In general, nonspouse beneficiaries that inherit an IRA from someone that passed away in 2020 or later may be required to withdraw the entire account balance within 10 years. Spousal beneficiaries and certain eligible nonspouse beneficiaries may be permitted to take RMDs over their life expectancy.

You won't pay taxes on withdrawals from an inherited Roth IRA as long as the original account owner held the IRA for at least 5 years.

But you will pay taxes on withdrawals from an inherited traditional IRA.

Learn more about inherited IRAs

Learn more about RMD rules for inherited IRAs

A word about loans from your 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 what's termed a "tax-free rollover" as long as 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.

Learn more about "tax-free rollovers"

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*The 5-year holding period for Roth IRAs starts on the earlier of: (1) the date you first contributed directly to the IRA, (2) the date you rolled over a Roth 401(k) or Roth 403(b) to the Roth IRA, or (3) the date you converted a traditional IRA to the Roth IRA. If you're under age 59½ and you have one Roth IRA that holds proceeds from multiple conversions, you're required to keep track of the 5-year holding period for each conversion separately.

You may wish to consult a tax advisor about your situation.

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Retirement accounts aren’t always known for their flexibility, which is why the relaxed rules that apply to a Roth IRA early withdrawal stand out: Because these accounts are funded with after-tax dollars, you’re free to pull out contributions at any time.

You can tap a Roth IRA, up to the amount you’ve contributed, for any reason, ranging from the responsible (there’s a hole in your roof and your kitchen is now a swimming pool) to the frivolous (you want to build a rooftop swimming pool above your kitchen).

That doesn't mean you should tap the account. The following quiz will give you the quick answer to whether your Roth IRA early withdrawal will be taxed — or read on for more details below.

Quick rundown: the Roth IRA early withdrawal

• If you want to withdraw contributions: After-tax contributions — commonly called "basis" — can be withdrawn at any time, for any reason, with no taxes or withdrawal penalties.

• If you want to withdraw earnings: You must satisfy two requirements for a qualified distribution to avoid both taxes and the 10% early withdrawal penalty. First, you must have held a Roth IRA account for at least five years, a clock that starts ticking at the beginning of the year of your first contribution. Second, you must be at least 59½, disabled, dead (the distribution is taken by heirs) or using up to $10,000 toward a first-home purchase.

If you don’t satisfy both points, a withdrawal of earnings is likely to come with income taxes and penalties. Some exceptions, outlined below, allow you to avoid the 10% early withdrawal penalty — but not taxes — on certain early distributions that aren’t qualified.

Early withdrawals of Roth IRA contributions

It might give you peace of mind to know Roth IRA contributions can be tapped in a pinch. They’re not a replacement for an emergency fund or an excuse to live above your means, but if things get dire, they can be a source of quick cash.

If you take a Roth IRA early withdrawal, contributions come out first, which is a rare move by the IRS to make things easier on you. You don’t have to worry about taxes — or about accounting for which portion of your distribution comes from earnings, and which from contributions — unless you pull out more than you’ve contributed.

Amounts converted into the Roth IRA come out next, on a first-in, first-out basis, and earnings come out last.

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Early withdrawals of Roth IRA earnings

Need to tap earnings? That’s where things get hairy.

You get to take qualified distributions tax-free. Trouble is, the IRS’s definition of a qualified distribution is narrow, and a distribution of earnings before age 59½ probably won’t meet it.

Early distributions of earnings for these reasons are considered qualified: not subject to taxes or the 10% penalty

Early distributions of earnings for these reasons are considered exceptions: taxable as income, but not subject to the 10% penalty

First, to avoid both income taxes and the 10% early withdrawal penalty, you must have held a Roth IRA for at least five years. This condition is satisfied if five years have passed since you first made a contribution to any Roth IRA, not necessarily the one you plan to tap. (There is an exception, however: If you’ve converted assets from a traditional IRA or 401(k) into a Roth IRA, each converted amount has its own five-year clock. Here's more on the Roth five-year rules.)

Second, you must be age 59½ or older, permanently and totally disabled or using the money for a first-time home purchase (and for that last one, there’s a $10,000 lifetime limit). Beneficiaries are also able to take qualified distributions after the death of the account owner.

If you don’t meet both rules for qualified distributions, the IRS will waive the penalty (but not taxes) if you take a distribution for one of these reasons:

• Qualified education expenses

• Unreimbursed medical expenses that exceed 7.5% of your adjusted gross income for the year

• You withdraw up to $5,000 in the year after the birth or adoption of your child

• Health insurance premiums while you are unemployed

• Qualified reservist distributions (for members of the military reserve called to active duty)

• A series of substantially equal periodic payments — recurring distributions designed to help you weather prolonged financial hardships before retirement age — which generally require that you take at least one distribution each year for five years or until you turn 59½, whichever comes later

Outside of those criteria, you may be taxed and penalized on an early withdrawal of earnings. Depending on your tax rate, that could eat a third to half of the taxable portion of your distribution.

In other words: With the exception of rare and dire circumstances, a Roth IRA early withdrawal isn't worth it.

What happens if I take out my Roth IRA early?

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