Here are four examples that illustrate the effect of this first five-year rule:
- Scenario 1: You are age 60 and you funded your first Roth IRA three years ago. In 2025, you take a distribution. You will be taxed on the earnings amount of the distribution because it’s been less than five years since you first contributed to the Roth IRA.
- Scenario 2: You’ve owned a Roth IRA since 2006. In 2022, you opened and funded a second Roth IRA. Because you funded your first Roth in 2006, you needn’t wait five years to take money from your second Roth for the earnings to be tax-free, provided you are at least age 59½ at the time of the distribution.
- Scenario 3: You did a partial Roth IRA conversion in 2016. You did a second partial Roth IRA conversion in 2022, when you were age 67. In 2025, you take a distribution from your Roth IRA. You will not be taxed on the distributed earnings because it's been more than five years since you first deposited money into any IRA (through the first conversion).
- Scenario 4: You did a Roth IRA conversion in 2012. In 2023, you opened and funded a second Roth IRA. Because you first deposited money into a Roth in 2012, you needn't wait five years to take money from your second Roth for the earnings to be tax-free, provided you are at least age 59½.
- https://www.kiplinger.com/taxes/five-year-rule-on-roth-ira-contributions-and-payouts-kiplinger-tax-letter
