What is the 5-Year Rule related to Roth IRAs? What is the 5-Year Rule related to Roth IRAs?

What is the 5-Year Rule related to Roth IRAs?

Joey Farbstein Joey Farbstein

Roth IRAs have a 5-year rule. While Roth IRA contributions are able to be withdrawn tax-free at anytime, the earnings in the account must be maintained until you're 59 1/2 in order to qualify for a tax-free distribution. The 5-year rule would be relavent, for example, if someone was 57 years old and have never had a Roth IRA. This person would have to wait until they were 62 in order to withdrawn their earnings tax-free.