Roth IRA Five-Year Rule

Retirement

The Roth IRA five-year rule has two flavors. For contributions: earnings can be withdrawn tax-free only after both reaching age 59½ AND having had any Roth IRA open for 5 tax years. For conversions: each conversion has its own 5-year clock for penalty-free withdrawal of the converted amount before 59½. The five-year clock starts January 1 of the year of contribution or conversion. Strategy: open a Roth IRA early (even with $100) to start the clock years before needed. Important for early retirees planning Roth conversion ladders to access tax-advantaged accounts before 59½ without penalty.