When Can You Make Withdrawals From a Roth IRA?

Learn about when you can make withdrawals from your Roth IRA account without incurring taxes or penalties. Find out about exceptions to the early withdrawal penalty and how to access your money before the five-year rule.

When Can You Make Withdrawals From a Roth IRA?

A Roth IRA is a retirement account that allows you to save money for retirement without having to pay taxes on the contributions or the earnings. Contributions to a Roth IRA are not tax-deductible, but withdrawals are tax-free and penalty-free after age 59 and a half, provided that the five-year retention period has been met. There are exceptions to the early withdrawal penalty, such as for first-time homebuyers, college expenses, and birth or adoption expenses. Withdrawals from contributions to the Roth IRA are always tax-free and penalty-free.

However, if you are under 59 and a half years old and your withdrawal exceeds your total contributions, you may be subject to taxes and penalties on the income portion of the withdrawal. For those looking to cover funeral costs, starting a Roth IRA at an early age and continuing to contribute to it should be sufficient. Although Roth IRAs are generally quite flexible when it comes to withdrawals, IRS rules impose a waiting period for certain withdrawals, known as the five-year rule. If you need access to your money before this period is up, there are other options available.

It is always advisable to consult with a qualified financial professional before making any decisions about withdrawals from a Roth IRA account. The IRS allows for certain exceptions that allow you to withdraw money from your Roth IRA without paying a penalty. These include higher education expenses at a college, college, vocational school, or other post-secondary school. The withdrawal rules for the Roth IRA vary depending on whether you take out your contributions or your investment income.

When the owner of a Roth IRA account dies, beneficiaries who inherit the account must accept the required minimum distributions (RMD) from the account.