When are distributions from Roth IRAs tax free?

Distributions of investment earnings are tax-free provided they satisfy a 5-year holding period and at least one of the following:

  • owner attains age 59 1/2
  • owner's death or disability
  • used for qualified first-time home purchase ($10,000 max)

If the 5-year holding period 
is not met, any investment earnings withdrawn are subject to a 10% penalty tax. If the 5-year holding period is met, but none of the conditions are met, the same income taxation and 10% penalty apply. Contributions to a Roth IRA may be withdrawn at any time without being taxed or incurring a penalty.

Nothing contained herein is intended to be, nor should it be construed as tax or legal advice. If you have a tax question or legal question, please consult your tax professional or attorney.

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