Individual Retirement Accounts » Roth IRAs

5-Year Period for Roth IRAs

The 5-year period for Roth IRAs with respect to distributions starts with the initial contribution to the Roth IRA. It does not reset. All earnings on contributions are eligible for tax-free and penalty-free distributions as long as there is a qualifying event and the account has been open for this 5-year period. Contributions may be withdrawn at any time tax-free and penalty-free.

Let's look at an example:

John makes a contribution for each year listed below. On June 5, 2006, he turns 59-1/2.

2002	$2,000
2003	$2,000
2004	$3,500
2005	$3,500
2006	$3,500

On January 1, 2006, the 5-year requirement was satisfied and on June 5, the age requirement was satisfied and John was eligible to take a tax-free distribution of all of the contributions and earnings that have been made into his account.