When can I take the money out after converting?

Two distinct 5-year rules apply to Roth IRAs. They are frequently confused because both are called "the 5-year rule".

Rule 1 — conversion principal (the penalty rule)

Each conversion has its own 5-year holding period, starting January 1 of the year of that conversion. Withdrawing converted principal before its 5-year period ends and before age 59½ triggers the 10% early-distribution penalty on the amount that was taxable when converted. No income tax applies (it was already paid at conversion) — this rule is about the penalty only.

• After age 59½, this rule is moot: converted principal can be withdrawn penalty-free at any time.
• Because the clock starts January 1 of the conversion year, a conversion in December 2026 satisfies its 5-year period on January 1, 2031 — about 4 years and 1 month of wall-clock time.
• A staged plan creates one clock per conversion year. Roth ordering rules treat withdrawals as coming from contributions first, then conversions (oldest first), then earnings.

This rule exists to prevent using a conversion as a detour around the 10% early-withdrawal penalty on traditional IRA distributions. It is the mechanism behind the "Roth conversion ladder" used by early retirees: convert an amount each year, wait 5 years, then withdraw penalty-free before 59½.

Rule 2 — earnings (the qualified-distribution rule)

Earnings come out tax-free only in a qualified distribution: the owner is 59½ or older (or meets death/disability/first-home exceptions) and at least 5 years have passed since January 1 of the year of the owner's first contribution or conversion to any Roth IRA. This clock runs once per person, not per contribution, and never restarts.

Consequence for late converters: someone who opens their first Roth IRA at 62 via a conversion must still wait until 67 for earnings (not principal) to be tax-free, despite being over 59½.

Summary table