Roth IRA Early Withdrawal Penalties

Taking money out of a Roth IRA before retirement does not automatically mean a penalty. Start with which dollars you are withdrawing: regular contributions, money previously converted to Roth, or investment earnings. Those three layers have different rules.

Jump to: which dollars come out · the $50,000 example · exceptions · five-year clocks · tax forms.

First, identify which dollars come out

You do not choose to withdraw earnings while leaving your contributions untouched. For nonqualified distributions, the IRS generally combines your Roth IRAs and applies this order across the owner's accounts:

Swipe or scroll sideways to read the full table.

Remaining matters. If you contributed $30,000 over the years but already withdrew $8,000 of those contributions, the regular-contribution layer is $22,000—not $30,000. A brokerage's current account balance is not a substitute for that history. See IRS Publication 590-B, Roth IRA ordering rules.

A $50,000 withdrawal that reaches no earnings

Suppose you are 35. Across your Roth IRAs, you have $100,000: $70,000 of remaining regular-contribution basis and $30,000 of earnings. There are no conversions or other adjustments in this example. You withdraw $50,000.

The $30,000 of earnings stays in the account. You do not owe tax on it merely because you took a large withdrawal. You also do not need a hardship, education or home-purchase exception to access the contribution layer.

That is a tax rule, not a reason to spend retirement savings. Investments can fall when you need cash, and an ordinary withdrawal does not restore annual contribution room. A permitted rollover or a specific repayment provision is a separate rule.

What is the 10% early withdrawal penalty?

The IRS calls it an additional tax. It can sit on top of regular income tax. For example, assume a withdrawal reaches $10,000 of nonqualified earnings, you are under 59½, no exception applies, and all of that taxable slice falls in the 24% federal bracket:

• Income tax: $10,000 × 24% = $2,400.
• Additional tax: $10,000 × 10% = $1,000.
• Combined federal cost in this illustration: $3,400, before any state tax or income-based benefit effects.

A penalty exception might remove the $1,000. It would not, by itself, remove the $2,400 income tax. Conversion recapture is different again: it can impose the 10% tax on previously taxed conversion principal without taxing that principal as income a second time.

Two five-year clocks to keep separate

1. The clock for tax-free earnings

A qualified Roth IRA distribution requires five tax years beginning with the first tax year for which you funded a Roth IRA, plus a qualifying event: age 59½, death, disability, or a qualifying first-home distribution within the $10,000 lifetime limit.

Turning 59½ removes the age-based 10% additional tax. It does not, by itself, finish this holding period. Someone who first funds a Roth IRA at 60 can still owe income tax on nonqualified earnings, even though the age-based penalty no longer applies.

2. The clock for each taxable conversion

Each conversion tax year has its own five-tax-year recapture period for the portion included in income when converted. A 2026 conversion's period begins January 1, 2026 and ends December 31, 2030. January 1, 2031 clears that particular clock. Reaching 59½ or qualifying for another exception can remove the penalty sooner.

Opening an older Roth IRA does not waive a newer conversion's recapture clock. And finishing a conversion clock does not automatically make earnings tax-free. Our five-year-rule guide separates the timelines.

Common penalty exceptions: what they do and do not cover

Use this checklist only after identifying the withdrawal layer. An exception is often irrelevant when the entire withdrawal is still regular contributions. This is a guide to common exceptions, not a substitute for every eligibility condition in the IRS exception table.

First-time home purchase: the $10,000 limit does not reset

The first-time-buyer test generally asks whether the buyer had an ownership interest in a main home during the two years before acquiring this home. A married buyer's spouse must meet the test too. Qualifying purchases can include a home for you, your spouse, or an eligible child, grandchild, parent or other ancestor.

The two-year test and the lifetime dollar cap are different. If Jason used his full $10,000 IRA first-home limit years ago, later going two years without owning a home does not give him another $10,000 limit.

Qualified acquisition costs generally must be paid within 120 days of receiving the distribution. If a purchase is canceled or delayed, a special rule may allow the amount to be rolled back into an IRA within 120 days of the distribution. That is not a new annual contribution. Check the conditions in Publication 590-B's first-home section.

See the home-purchase guide for the expense and timing checklist.

Qualified education expenses

The exception can cover eligible higher-education expenses for you, your spouse, your children or your grandchildren. Tuition, required fees, books, supplies and equipment can qualify; room and board has additional limits and generally requires at least half-time enrollment. The school must meet the federal eligibility rules.

Tax-free educational assistance can reduce the expenses available for the exception. Coordinate any education credits and 529 withdrawals rather than assuming every education-related dollar qualifies. Even when the penalty exception applies, nonqualified Roth earnings remain income-taxable. Our education-withdrawal guide walks through that distinction.

Medical expenses: use final AGI, not income before the withdrawal

You do not have to itemize deductions. The exception is limited to qualifying unreimbursed medical expenses above 7.5% of your adjusted gross income, or AGI. AGI is the income measure on your tax return before the standard or itemized deduction. A taxable withdrawal can raise it and shrink the exception.

Suppose Angela's AGI before this withdrawal is $120,000 and her qualifying unreimbursed medical expenses are $12,000. She has $20,000 of remaining Roth regular-contribution basis, no conversions, and takes $25,000 before age 59½. The $5,000 of nonqualified earnings raises her AGI to $125,000, assuming no other changes.

All $5,000 of earnings is still subject to ordinary income tax. If Angela instead had enough remaining regular contributions to cover the whole withdrawal, neither tax would arise from it. The medical exception would not be needed.

Health insurance while unemployed

For this exception, job loss alone is not enough. Generally, you must receive unemployment compensation for 12 consecutive weeks under federal or state law, withdraw during that year or the next, and take the distribution no later than 60 days after being reemployed. The exception is limited to qualifying health-insurance premiums for you, your spouse and dependents. Special treatment can apply to a self-employed person who would have qualified for unemployment compensation but for self-employment.

Disability, death, reservist service and IRS levy

• Disability: the tax rule requires an inability to engage in substantial gainful activity because of a physical or mental condition that a physician determines is expected to result in death or to be of long, continued and indefinite duration. It is not simply any disability diagnosis.
• Death: beneficiary distributions generally have a death exception to the 10% tax. A surviving spouse who treats the account as their own must then consider the rules for an owner's withdrawals. Inherited Roth earnings also depend on the deceased owner's five-tax-year period; see inherited Roth taxes.
• Reservists: qualifying orders must call the reservist to active duty for more than 179 days or for an indefinite period, after September 11, 2001. The distribution must fall between the order or call and the end of active duty. A qualifying amount can generally be repaid to an IRA during the two years after active duty ends.
• IRS levy: the exception covers an IRS levy on the IRA. An ordinary withdrawal that you use to pay the IRS does not qualify on that basis.

Birth, adoption and newer exceptions

Birth or adoption: the $5,000 limit is per parent per eligible child, not a fresh annual allowance. The distribution must occur within one year of birth or final adoption. For an eligible adoptee, age and relationship restrictions apply. Current qualifying distributions generally have a three-year repayment window.

Emergency personal expenses: generally one qualifying distribution per calendar year, limited to the lesser of $1,000 or the amount by which the account's vested balance exceeds $1,000. A further restriction applies during the next three calendar years unless the earlier amount is repaid or the specified contribution condition is satisfied. The repayment period is three years, not the next tax-filing deadline. IRS Notice 2024-55 explains the separate limits.

Domestic abuse: for 2026, a qualifying distribution is limited to the lesser of $10,500 or 50% of the account balance, and must be made during the one-year period beginning on a qualifying incident. The rule does not require the money to be spent only on relocation or living expenses. A three-year repayment provision can apply.

Terminal illness: the exception applies to qualifying distributions after December 29, 2022, following a physician's certification of an illness or physical condition reasonably expected to result in death within 84 months. A three-year repayment provision can apply. See IRS Notice 2024-2.

Qualified disaster recovery: the combined limit is $22,000 per qualified disaster across eligible retirement plans. Your main home must have been in the qualified area during the incident period, you must have sustained an economic loss, and the distribution must meet the applicable deadline. Eligible taxable amounts can generally be spread over three years or repaid within three years. Use the IRS disaster FAQ to check a particular event.

Correcting excess contributions: a timely corrective distribution can include taxable earnings without the old 10% early-distribution tax on those earnings. That does not turn an uncorrected excess into an allowed contribution or eliminate a separate excess-contribution excise tax when one is due.

SEPP / 72(t): a payment schedule, not occasional withdrawals

Substantially equal periodic payments, often shortened to SEPP or 72(t), can provide an exception before 59½. They require a calculated payment series, not simply taking roughly the same amount whenever convenient.

The IRS permits an annual recalculation method based on life expectancy and two fixed methods: amortization and annuitization. Under Notice 2022-6, the interest rate for a fixed method cannot exceed the greater of 5% or 120% of the federal mid-term rate for either of the two months immediately before payments begin.

The series generally must continue until the later of the fifth anniversary of the first payment and age 59½. Start at 50 and the commitment generally runs until 59½; start at 58 and it generally runs for five years, to 63.

An impermissible change can trigger recapture of the additional tax previously avoided, plus interest. That is not automatically 10% of every gross Roth payment: the underlying tax treatment matters. The IRS allows certain changes, including a one-time switch from a fixed method to the annual required-minimum-distribution method. Review the IRS SEPP FAQ with a tax professional before starting or altering a series.

Does the rule of 55 apply to an IRA?

No. The separation-from-service exception commonly called the rule of 55 is an employer-plan rule, not an IRA rule. Generally, qualifying separation must occur in or after the calendar year you reach 55; special rules cover certain public-safety employees.

Money rolled into an IRA cannot use that employer-plan exception while it is in the IRA. Check the account type before moving funds you expect to need soon. See Roth IRA versus 401(k).

How to work out and report the tax

1. Reconstruct the Roth history. Gather contribution records, prior withdrawals, conversion years and taxable conversion amounts across your Roth IRAs. Your custodian may not have all of this information.
2. Apply the ordering rules and qualification tests. For nonqualified Roth distributions, Form 8606 Part III helps determine the taxable earnings. Its worksheets also matter when conversion recapture is possible.
3. Apply any exception to the right amount. Form 5329 Part I handles the early-distribution additional tax and many exceptions. Its starting amount is not automatically the gross distribution from Form 1099-R. Follow the instructions for taxable earnings, recapture and any special entries.
4. Use the correct tax-year form and exception code. Do not assume every new exception uses the same catchall code. Disaster distributions may require Form 8915-F. Keep the eligibility records with your tax files.

See the Form 8606 instructions, Form 5329 instructions and, where relevant, Form 8915-F instructions. The latest final instructions reviewed for this correction are for 2025; use the 2026 versions when preparing a 2026 return once available.

State taxes and the decision beyond the penalty

Federal treatment is not the whole answer. Some states have different basis, retirement-income or additional-tax rules. California, for example, can impose its own additional tax on covered early distributions, and its exceptions do not always match federal exceptions. Start with the California guide or your state's instructions rather than assuming a federal exception settles both returns.

A fully pre-tax 401(k) cash withdrawal of $50,000 before 59½, with no exception, can create $50,000 of taxable income plus a $5,000 federal additional tax. That is different from the Roth example above, where $50,000 comes entirely from remaining contributions. Account type and tax history drive the comparison.

Before withdrawing, ask three separate questions: Can I access it? What tax would it create? What retirement savings would I give up? Penalty-free answers only part of the decision.

Sources and tax-year notes

• IRS Publication 590-B: Roth ordering, qualified distributions and IRA exceptions.
• Form 8606 instructions and Form 5329 instructions: income-tax and additional-tax reporting.
• IRS Notice 2025-67: the indexed 2026 domestic-abuse distribution limit.
• Notices 2022-6, 2024-2, 2024-55 and 2026-33, and the IRS disaster FAQ, linked in the relevant sections above.

Rules and examples checked August 31, 2026. Worked examples are hypothetical and omit changes not expressly stated. Educational information is not an individualized withdrawal recommendation.

Frequently asked questions

What is the penalty for early withdrawal from a Roth IRA?

The usual federal additional tax is 10% of taxable early-distribution earnings unless an exception applies. A separate five-tax-year rule can also apply to the taxable portion of a recent conversion or rollover. Remaining regular contributions come out first, free of federal income tax and this additional tax.

Can you withdraw from a Roth IRA without penalty?

Yes. Withdrawals within your remaining regular-contribution basis are free of federal income tax and the 10% additional tax at any age. For conversion dollars or earnings, check the ordering rules, the applicable five-year clock, your age and any exception.

Is there a penalty for early withdrawal from a Roth IRA at age 40?

Age 40 alone does not decide the result. A $50,000 withdrawal with $70,000 of remaining regular-contribution basis reaches no conversions or earnings. Its federal income tax and 10% additional tax are both $0.

What are the exceptions to the Roth IRA early withdrawal penalty?

Examples include qualifying first-home, education, medical, unemployment-health-insurance, disability, death, reservist, birth/adoption and SEPP distributions. Newer exceptions cover certain emergencies, domestic abuse, terminal illness and disaster recovery. Each has its own eligibility and limits; a hardship by itself is not an exception.

Do you pay tax on a Roth IRA early withdrawal with an exception?

Often, yes: a penalty exception alone does not make nonqualified earnings income-tax-free. A qualified Roth distribution requires the five-tax-year holding period plus age 59½, death, disability or a qualifying first-home distribution within the $10,000 lifetime limit.