Roth IRA Age Limit Rules for Withdrawals

Roth individual retirement accounts promise tax-free withdrawals -- that's right, no taxes on any money you take out -- but you have to meet a few conditions first. If you meet those conditions, it's a qualified withdrawal. However, if you can't meet the conditions to take a qualified withdrawal, Uncle Sam will still let you take out your money; you just might have to share some of it with the government in taxes and penalties.

Account Age Requirements

To take a qualified withdrawal, the first criteria requires your Roth IRA to be five tax years old. These tax years count from Jan. 1 of the first tax year you make a contribution, no matter when you actually put the money in. For example, you could make your 2013 Roth IRA contribution on Jan. 1, 2013, or as late as Apr. 15, 2014. No matter which day you actually put it in the account, if the 2013 contribution is your first, your five years start running on Jan. 1, 2013.

Personal Age Requirements

One way to satisfy the second criteria for qualified withdrawals is being at least 59 1/2 years old when you take the money out. But, there are other ways to satisfy this condition, too. For example, you meet the requirement if you're permanently disabled, are taking distributions from an inherited Roth IRA, or you're taking out up to $10,000 to buy a first home. For example, if you inherited a Roth IRA and the account is more than five tax years old, all your distributions are penalty-free regardless of your age.

Withdrawing Contributions

Unlike other types of retirement accounts, Roth IRAs let you take out your contributions whenever you need or want them without taxes or penalties. You weren't allowed to deduct the contributions on your tax return when you made them, so the distribution doesn't count as taxable income. Because it isn't taxable income, it's not hit with the 10 percent early withdrawal penalty. For example, say you've put in $25,000 to your Roth IRA over the years. You can take that $25,000 out whenever you want without taxes or penalties, regardless of your age.

Early Earnings Withdrawals

If, on the other hand, you're taking out earnings and you don't meet the two requirements for a qualified distribution, you're going to have to include the earnings in your taxable income for the year. Plus, unless you qualify for an exception, a 10 percent additional tax penalty also applies. Only one of the exceptions is age-related: When you're at least 59 1/2, you don't have to pay the penalty.


About the Author

Mark Kennan is a writer based in the Kansas City area, specializing in personal finance and business topics. He has been writing since 2009 and has been published by "Quicken," "TurboTax," and "The Motley Fool."