# Roth IRAs and the Five-Year Rule: What You Need to Know
The five-year rule for Roth IRAs trips up many savers. Understanding it correctly saves you money and penalties.
The rule works differently depending on whether you're dealing with contributions or conversions. For contributions, the five-year clock starts on January 1 of the year you make your first Roth IRA contribution. After five years pass, you can withdraw those contributions tax-free and penalty-free at any age. This applies to every Roth IRA you own, not each individual account.
Conversions follow a separate five-year rule. When you convert money from a traditional IRA to a Roth IRA, a new five-year clock starts. You cannot withdraw the converted funds penalty-free before age 59½ until five years have passed from the conversion date. However, you can withdraw the actual contribution portion of your original contributions anytime without penalty.
Here's the practical impact. If you're 40 years old and make your first $7,000 Roth IRA contribution in 2024, you can withdraw that $7,000 in 2029 without taxes or penalties. If you convert $50,000 from a traditional IRA to a Roth IRA in 2024, you must wait until 2029 to withdraw the converted amount penalty-free (unless you reach 59½ first).
The five-year rule does not reset if you move money between Roth accounts or consolidate multiple Roths into one. Your original five-year clock keeps ticking.
One exception exists for inherited Roth IRAs. Beneficiaries follow different rules depending on their relationship to the account owner and whether they inherited before or after the SECURE Act took effect in 2020.
The takeaway