Roth 5-Year Rules

People say “the five-year rule” as if there were one. There are at least three for Roth money, and they answer different questions. The first decides whether earnings in a Roth IRA are ever tax-free. The second decides whether converted dollars can be withdrawn before 59½ without the 10% additional tax. The third does the first job for a Roth 401(k), 403(b) or governmental 457(b), one plan at a time.

All of them count tax years, not days. Each starts on January 1 of the year it is tied to and ends on December 31 of the fifth year, so a clock that starts in 2026 is met on January 1, 2031. A contribution made in late December and one made in January of the same year are treated alike.

None of the clocks touches your own regular Roth IRA contributions. Those come out first and are always free of tax and penalty, at any age.

A Roth IRA withdrawal is a qualified distribution, completely tax-free, only when two tests are met. Five tax years must have passed since January 1 of the first year for which you made a contribution to any Roth IRA. And you must be 59½ or older, disabled, or buying a first home (up to $10,000 over your lifetime), or the money must be paid out after your death.

The start date is generous. A contribution for 2026 made as late as the April 2027 deadline still starts the clock on January 1, 2026. A conversion starts it too, if it comes before your first contribution, so a first backdoor Roth IRA conversion in 2026 also sets January 1, 2026. After that the clock never restarts: you have one clock for all your Roth IRAs, including ones opened later. A contribution withdrawn to correct an excess is treated as never made and doesn’t start it.

Missing the test costs less than many people fear. A nonqualified withdrawal is taxed only on its earnings, and the ordering rules make you use up all regular contributions and converted amounts before any earnings come out. The clock matters most to someone who plans to draw Roth earnings soon after 59½, or to a first-time Roth saver in their late 50s or older.

Every Roth conversion, and every rollover of non-Roth workplace-plan money into a Roth IRA, starts its own five-year period, also from January 1 of its year. It doesn’t decide whether money is tax-free. It decides one thing: if you are under 59½ and withdraw converted dollars before their period ends, the part that was taxable when converted owes the 10% additional tax.

Three details make this clock gentler than it sounds. The tax applies only to the amount that was included in income on conversion, so converted basis, such as a nondeductible contribution run through a backdoor Roth, carries no recapture. The usual exceptions to the 10% tax still apply. And once you reach 59½ the conversion clocks stop mattering, although earnings still need the account’s first clock.

The ordering rules decide which conversion a withdrawal touches: regular contributions first, then conversions from the earliest year, taxable part before nontaxable part, and earnings last. That order is what makes a Roth conversion ladder work, with each year’s conversion becoming available five years later.

Designated Roth accounts, the Roth side of a 401(k), 403(b) or governmental 457(b), have a separate clock in each plan. It starts on January 1 of the first year you made Roth deferrals to that plan, or of your first in-plan Roth rollover if that came first. A direct rollover from another employer’s Roth account carries that account’s start date if it is earlier; an indirect 60-day rollover doesn’t.

Two differences from Roth IRAs catch people. A nonqualified withdrawal from a Roth 401(k) isn’t contributions-first; each dollar is a proportional mix of contributions and earnings, so part of it is taxable. And rolling a Roth 401(k) into a Roth IRA doesn’t bring its clock along: the money takes on the Roth IRA’s clock instead.

In-plan Roth rollovers, including the conversions behind a mega backdoor Roth, carry a conversion-style clock too: the taxable part of each rollover owes the 10% tax if it is withdrawn within five years and before 59½, unless an exception applies.

When a Roth IRA owner dies, the clock doesn’t restart. A beneficiary counts the owner’s time, so an heir who inherits an account first funded in 2019 has already met the five-year test. If the owner dies before the period ends, the heir still takes contributions and conversions out tax-free, but withdrawn earnings are taxable until it ends. The 10% additional tax doesn’t apply to payments made because of the owner’s death. A surviving spouse who treats the account as their own gets the earlier of the two spouses’ start dates.

Several unrelated rules also run on five years and are often confused with the Roth clocks: