Roth IRAs are powerful tools for building tax-free retirement wealth, but the 5-year rules for withdrawals often trip people up. Let’s demystify these rules for both contributions and conversions, using common real-life scenarios for people at different stages — young professionals, mid-career savers, and retirees.

What Are the Two 5-Year Roth IRA Rules?

• 1. The 5-Year Rule for Contributions:

  • Before you can withdraw earnings (growth) from any Roth IRA tax-free, you must be age 59½ or older and have had any Roth IRA open for at least five years.

• 2. The 5-Year Rule for Conversions:

  • Each Roth conversion (moving money from a traditional IRA to a Roth IRA) for those under 59½ starts its own 5-year clock. You must wait five years to withdraw that conversion amount, or you’ll be penalized.

Let’s clarify each rule with practical examples.

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Example 1: Young Professional Starting Out

Situation:

• Alex is 30. She opens her first Roth IRA in 2025 and contributes $6,000 every year.

• By 2030, her account has grown to $34,000 ($30,000 contributed plus $4,000 in growth).

What withdrawals can Alex make?

• She can always withdraw her contributions ($30,000) at any time, for any reason, with no tax or penalty.

• If she wants to withdraw her $4,000 in earnings before age 59½:

  • She pays taxes and a 10% penalty unless it’s for a qualified exception.

• Once she turns 59½ and it’s 2030 (five years after opening):

  • All withdrawals—contributions and earnings—are tax- and penalty-free.

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Example 2: Mid-Career Saver Making Roth Conversions

Situation:

• Jamie, age 45, has a large traditional IRA.

• In 2025, Jamie converts $20,000 to a Roth IRA. In 2026, Jamie converts another $10,000.

What if Jamie needs cash before age 59½?

• Each conversion amount must stay in the Roth five years to avoid a 10% early withdrawal penalty on the conversion principal, even though taxes were already paid at conversion.

• The two conversions have separate 5-year clocks:

  • The $20,000 from 2025 can be tapped penalty-free in 2030.

  • The $10,000 from 2026 can be tapped penalty-free in 2031.

• Any growth on these conversions is still taxable/penalized if withdrawn before age 59½ and before the 5-year clock for contributions runs out.

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Example 3: Retired Person Doing Conversions After 59½

Situation:

• Pat retires at 62. She opens her first Roth in 2024 and does several conversions over the next five years.

Withdrawals:

• Because Pat is over 59½, she can pull out any initial conversion amounts or direct contributions at any time, free of penalty or tax.

• To take out any earnings on her Roth IRA tax-free, she must wait five years from her first Roth IRA opening (so, withdrawals of earnings after 2029).

• No need to track each conversion’s separate 5-year period—once over 59½, only the 5-year rule for earnings matters.

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Example 4: The Multiple Roth IRA / Custodian Scenario

Situation:

• Krista opens a Roth at Schwab in 2020, then in 2023 opens another Roth at Vanguard and closes her Schwab account.

Does the 5-year clock restart?

• No. The IRS looks at when Krista opened any Roth IRA. Her clock started in 2020, so as of 2025, she meets the 5-year test, no matter the custodian.

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Example 5: Rolling Over a Roth 401(k) to Roth IRA

Situation:

• Diego contributed to a Roth 401(k) from 2017 to 2025, then retires at 60 and wants to roll it into his first Roth IRA.

What happens?

• Roth 401(k) and Roth IRA each have their own 5-year clocks. When Diego opens his first Roth IRA in 2025, the clock for the Roth IRA starts then—even though the 401(k) clock began in 2017. So he’ll wait until 2030 to tap earnings from his new Roth IRA completely tax-free.

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Example 6: High Earners Using Backdoor Roth Strategies

Situation:

• Sam, a high-income earner, is ineligible for direct Roth IRA contributions. He makes non-deductible traditional IRA contributions, then converts them to Roth (“backdoor Roth”).

Which 5-year rule applies?

• Once the backdoor contribution reaches the Roth IRA, it follows the same 5-year clock rules as regular Roth contributions:

  • Contributions = tax- and penalty-free at any time.

  • Earnings = tax-free if over 59½ and the 5-year clock is satisfied.

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Pro-Tip: Roth IRA Withdrawal Ordering Rules

The IRS applies Roth withdrawals in this order:

1. Contributions: Always come out first, tax- and penalty-free.

2. Conversions: Come out next, oldest first. Each is subject to its own 5-year clock (if under 59½).

3. Earnings: Come out last and are only tax- and penalty-free if both age and 5-year conditions are met.

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Key Takeaways

• Start your 5-year clock early by opening a Roth, even if you contribute just $100—it sets you up for later tax-free withdrawals.

• Don’t sweat multiple accounts or switching providers! Your clock stays with you as long as you’ve had a Roth open.

• If you’re over 59½: You have instant access to contributions and conversions, but check your clock before withdrawing earnings.

• If you’re under 59½ and converting: Mark your calendar; each conversion needs its own 5-year wait for penalty-free access.

Want to maximize your Roth planning? Review your situation with a financial planner, or use these examples to double-check your own 5-year clocks before withdrawing. With a little planning, you can make the Roth work for you—without any surprise taxes.