When Are Withdrawals Allowed from Roth IRAs?

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When Are Withdrawals Allowed from Roth IRAs?

Only qualified withdrawals of earnings are allowed from a Roth IRA. Qualified withdrawals do not incur taxes. They are what make the Roth IRA attractive to many investors seeking to fund their retirements. Two criteria must be met for earnings to be qualified: the individual must be at least 59½, and the funds must have been in the account for at least five years. Withdrawals of contributions may be made anytime without tax or penalty.

Penalty tax and exceptions

The IRS considers any non-qualified withdrawal to be taxable income. All such withdrawals are subject to income tax on their earnings as well as the 10 percent penalty on early distributions. The 10 percent penalty tax does not, however, apply to the following situations:

• You are disabled.
• You are the beneficiary of a deceased IRA owner.
• You use the distribution to pay certain qualified first-time homebuyer amounts.
• The distributions are part of a series of substantially equal payments.
• You have significant unreimbursed medical expenses.
• You are paying medical insurance premiums after losing your job.
• The distributions are not more than your qualified higher education expenses.
• The distribution is due to an IRS levy of the qualified plan.
• The distribution is a qualified reservist distribution.

One is not required to take distributions from a Roth IRA during one’s lifetime.

For more information

IRS Publication 590b has more details on withdrawals.