Question

I have a question about IRA withdraw penalties. If I withdrew Roth IRA funds of amounts I contributed four years ago, why am I being charged IRA withdraw penalties now?

Answer

You must have a Roth IRA for five years before you can take a qualified distribution. It doesn’t have to be the same Roth IRA as the one you’re withdrawing from.

The five-year period starts on Jan. 1 of the first tax year you opened and funded a Roth IRA. It ends five years later on Dec. 31. This is a lifetime qualification. So, after you meet the holding-period requirement once for the first Roth IRA you own:

  • You’ll have met the holding periods for all Roth IRAs you own.
  • Regarding IRA withdraw penalties, you can take out earnings tax-free and penalty-free after age 59 1/2 — or earlier if you qualify for a Form 5329 exception.

Related Topics

Related Resources

Vacation Home Rental Tax Rules

Learn more about the tax rules for renting your vacation home for part of the year from the experts at H&R Block.

Double Taxed Income From Multiple State Living

If you report income earned in a nonresident state on your resident and nonresident return, will you be double-taxed? Learn more from the tax experts

Capital Gains And Rental Property Sales

Do you have to pay capital gains if you sell your rental property? Learn more from the tax experts at H&R Block.

What Is My Child’s Gross Income Threshold for Filing Taxes?

Let the experts at H&R Block help you calculate your child’s gross income with these helpful tips.