Rule 1 — the qualification clock (does the earnings tax apply?)

A Roth distribution is qualified — entirely free of income tax and of the 10% additional tax — only when it passes two independent tests at once:

• The 5-taxable-year period. It begins with the first taxable year for which you made a contribution to any Roth IRA, and a conversion counts: the period starts with the first taxable year in which a conversion contribution was made if that is earlier than your first regular contribution.
• A qualifying event. You are at least 59½, or the distribution is made to a beneficiary after your death, or you are disabled, or it is a first-time-homebuyer distribution of up to $10,000 lifetime.

The regulation puts it in one sentence: the period “begins on the first day of the individual’s taxable year for which the first regular contribution is made to any Roth IRA of the individual or, if earlier, the first day of the individual’s taxable year in which the first conversion contribution is made” — and “each Roth IRA owner has only one 5-taxable-year period… for all the Roth IRAs of which he or she is the owner.” Four consequences people routinely get wrong:

• Only one clock, ever. The period is measured per owner across every Roth IRA you hold, not per account. Opening a second Roth IRA in 2030 does not start a second clock — and it does not shorten the one already running either.
• “For which” vs “in which.” Those two words carry most of the published errors on this topic. A regular contribution counts for the tax year you designate it for, so a contribution made in April 2027 for tax year 2026 starts the clock January 1, 2026. A conversion cannot be designated for a prior year: it always counts in the calendar year it happens.
• Taxable years, not 60 months. A conversion on December 31, 2026 gets credit for all of 2026, so the period runs 2026–2030 and Rule 1 is met January 1, 2031. The IRS example is a February 25 conversion whose 5-year period starts the preceding January 1.
• Death does not restart it. The period is expressly not redetermined when the owner dies: a beneficiary’s inherited Roth IRA counts the years the decedent held it. (Closing your own Roth IRA to a zero balance and contributing to a Roth IRA again later has no restart rule written for it either — with one period per owner and a start year already set, there is nothing for a later contribution to reset.)

Sources: 26 CFR 1.408A-6, A-1(b) (the two prongs), A-2 (start of the period, aggregation across all Roth IRAs, the April-1999-for-1998 example) and A-7(a) (not redetermined at death); IRC §408A(d)(2)(A)–(B); IRC §72(t)(8)(B) ($10,000 lifetime first-home limit); IRS Publication 590-B, ch. 2, “What Are Qualified Distributions?”.

Rule 2 — the per-conversion clock (does the 10% apply?)

Converted money was already taxed in the conversion year, so taking it out later is never taxed again. What can bite is the 10% additional tax on early distributions, recaptured if you pull a conversion out too soon:

• Each conversion carries its own 5-taxable-year period, beginning the first day of the taxable year in which that conversion was made. Three conversions means three clocks running in parallel — the regulation says the period “is separately determined for each conversion contribution” and “need not be the same as” the qualification period of Rule 1.
• The recapture applies to the part of the conversion that was includible in your income when you converted — the pre-tax part. Basis converted tax-free (a backdoor Roth with no pre-tax balance) carries no recapture exposure.
• It is a penalty question, never an income-tax question: the 10% applies “even if it is not then includible in gross income.” Distributing a 2-year-old conversion adds no income; it can add 10% of the amount.
• At 59½ the question disappears. The recapture exists only because the 10% additional tax under §72(t) could apply, and the regulation states that “the exceptions under section 72(t) also apply.” Once you are 59½ — or another §72(t) exception fits, such as death, disability, or substantially equal periodic payments — no conversion layer can trigger it, no matter how young the conversion is.

This is exactly why a Roth conversion ladder works: convert five years before you need the money, and each rung matures into penalty-free spending money right when you plan to spend it. See the Roth conversion ladder calculator for the amounts, and this page for the dates.

Sources: 26 CFR 1.408A-6, A-5(a)–(c) (10% additional tax on the amount allocable to the taxable portion of a conversion; separate period per conversion; §72(t) exceptions apply); IRC §408A(d)(3)(F); IRC §72(t)(2)(A); IRS Publication 590-B, ch. 2, “Additional Tax on Early Distributions — Distributions of conversion and certain rollover contributions within 5-year period”.

The ordering rules — which dollars actually leave the account

You never choose which layer you are withdrawing. Every distribution from every Roth IRA you own is aggregated for the taxable year and comes out in a legally set order, exhausting each category before moving to the next:

1. Regular contributions first — always tax-free and penalty-free, at any age, on day one.
2. Conversion contributions next, first-in, first-out (oldest conversion year first) and, within a single conversion, the portion that was includible in income at conversion before the portion that was not.
3. Earnings last — the only layer Rule 1 actually governs.

The FIFO order is what makes the two rules interact. Because the oldest conversion leaves first, the layers most likely to still sit inside their own 5-year window — the newest ones — are also the last to be reached. And because the ordering is determined as of the end of the taxable year across all of your Roth IRAs together, opening a separate account for “just the contributions” changes nothing.

Worked example

Sara is 48. She opened her first Roth IRA for tax year 2021 with a $6,000 contribution, then converted $30,000 of pre-tax IRA money in 2023 and $20,000 in 2025 (all of it includible in income at conversion). Her account has since grown by $9,000 of earnings. In 2026 she withdraws $50,000. Her Rule 1 period (2021–2025) is complete, so it is tempting to assume everything is clear. It is not.

The point everyone misses. Sara owes $4,400 of additional tax and $0 of income tax on a $50,000 withdrawal. Finishing Rule 1 did nothing for her, because the recapture in Rule 2 is written to hit a non-qualified distribution allocable to a conversion inside that conversion’s own period — and at 48 her distribution is non-qualified no matter how old her Roth IRA is. The two periods are, in the regulation’s own words, separately determined and “need not be the same.” What actually releases a conversion layer early is age (or another §72(t) exception), not seniority of the account.

Flip one input and the answer flips with it: if Sara were 60 in 2026, the same $50,000 would carry no income tax and no 10% — the 2025 conversion included, three years into its own period — because past 59½ the additional tax has no reach.

Sources: 26 CFR 1.408A-6, A-8(a)(1)–(3) and A-8(b) (regular contributions, then conversion contributions first-in-first-out with the includible portion first, then earnings), A-9(a) (all distributions from all of an individual’s Roth IRAs in a taxable year are aggregated), A-5(b)–(c); IRC §408A(d)(4)(B); IRS Publication 590-B, ch. 2, “Ordering Rules for Distributions”.

What are the two Roth IRA 5-year rules?

The first is the qualification rule: a distribution of earnings is tax-free only after a 5-taxable-year period that starts January 1 of the first year you put money in any Roth IRA, and only if you are also 59½, disabled, deceased, or buying a first home. The second is the conversion rule: each conversion carries its own 5-taxable-year period, and taking that converted money out early can trigger the 10% additional tax even though no income tax is due.

When does the Roth 5-year clock start?

It starts on January 1 of the first taxable year for which you made a regular contribution to any Roth IRA, or, if earlier, the first taxable year in which you made a conversion. A contribution you make in April 2027 designated for tax year 2026 starts the clock on January 1, 2026. The period counts taxable years, not 60 months, so a December conversion still gets credit for that whole year.

Does each Roth conversion have its own 5-year clock?

Yes. For the 10% additional tax on early distributions, each conversion has a separate 5-taxable-year period beginning January 1 of the year of that conversion. Withdrawing the taxable part of a conversion inside its own period triggers the 10% unless an exception applies. Once you reach 59½ the recapture no longer applies to any layer, because the 10% additional tax itself stops applying.

What order does money come out of a Roth IRA?

Regular contributions come out first, then conversions on a first-in-first-out basis with the taxable portion of each conversion before its non-taxable portion, and earnings last. All of your Roth IRAs are treated as one account for this ordering, so you cannot choose which layer to withdraw.

Does a Roth 401(k) share the Roth IRA 5-year clock?

No. A designated Roth account in a 401(k) or 403(b) runs its own 5-taxable-year period per plan, and that period does not carry over to a Roth IRA. Rolling a designated Roth account into a Roth IRA puts the money under the Roth IRA’s own clock, which is one reason to open a Roth IRA early even with a small amount.