2026 rules
IRA Withdrawal Rules 2026: 5-Year Clocks, Age 59.5, SEPP 72(t), and All Exceptions
IRA withdrawal rules are frequently misunderstood, especially the two separate Roth 5-year clocks. This page separates the rules clearly, lists all 13 early withdrawal exceptions, and explains SEPP 72(t) for early retirees.
The Basics: Traditional vs Roth Withdrawal Treatment
Traditional IRA
- Any withdrawal is taxable as ordinary income.
- Before age 59.5: additional 10% early withdrawal penalty, unless an exception applies.
- After age 59.5: no penalty, but full ordinary income tax on every dollar withdrawn (including any basis from non-deductible contributions, tracked on Form 8606).
- RMDs begin at age 73 (born 1951-1959) or 75 (born 1960+).
Roth IRA
- Contributions: always withdrawable tax-free and penalty-free at any age.
- Earnings: tax-free and penalty-free only in a “qualified distribution” (account open 5+ years AND age 59.5+ or exception).
- No RMDs during the account owner’s lifetime.
- Ordering rule: contributions come out first, then conversions, then earnings.
The two 5-year rules - explained clearly
Clock 1: The Roth Account 5-Year Rule
Applies to: the tax-free treatment of Roth earnings. Your Roth IRA must have been open (first contribution made) for at least 5 tax years before earnings can be withdrawn tax-free. The 5-year period starts January 1 of the year of your first Roth IRA contribution, to any Roth IRA you own. Once this clock clears, all future earnings on Roth IRAs you own are tax-free (assuming you are 59.5+ or have an exception). You only start this clock once, ever.
Clock 2: The Roth Conversion 5-Year Rule
Applies to: the 10% early withdrawal penalty on converted amounts, for people under 59.5. Each Roth conversion has its own independent 5-year clock. If you are under 59.5 and withdraw a converted amount before it has been in Roth for 5 years, you owe the 10% penalty on that converted amount. Once you are 59.5, this clock is irrelevant for penalty purposes (though Clock 1 still applies to earnings). This is the clock that the Roth conversion ladder relies on.
Roth IRA Withdrawal Ordering Rules
The IRS specifies the order in which Roth IRA funds are withdrawn. This ordering determines what tax and penalty rules apply.
Regular contributions
Always tax-free and penalty-free
Converted amounts (oldest first)
Tax-free; penalty applies if under 59.5 and conversion is less than 5 years old
Earnings (investment returns)
Tax-free and penalty-free only if qualified; otherwise taxable + 10% penalty
The practical implication: most Roth IRA owners who contributed regularly will never touch earnings at all, because contributions and older conversions get exhausted first. This makes early withdrawal rules largely irrelevant for typical Roth holders.
All 13 Early Withdrawal Exceptions
These exceptions apply to both Traditional and Roth IRA early withdrawals (before age 59.5). They waive the 10% penalty but NOT the ordinary income tax on Traditional withdrawals.
First-time home purchase ($10,000 lifetime cap per IRA owner)
Qualified higher education expenses (tuition, fees, books, supplies)
Medical expenses exceeding 7.5% of adjusted gross income
Health insurance premiums paid during a period of unemployment
Disability (total and permanent)
Death (beneficiary access to inherited IRA)
IRS levy
Substantially Equal Periodic Payments (SEPP 72t) rule
Birth or adoption ($5,000 per child, added by SECURE Act 2019)
Qualified disaster distribution (up to $22,000 per disaster)
Emergency expenses ($1,000 per year, added by SECURE 2.0)
Domestic abuse victim distribution ($10,000 or 50% of balance, SECURE 2.0)
Terminal illness certification (SECURE 2.0)
Source: IRS Pub 590-B and SECURE Act 2.0 amendments. Last verified April 2026. Some exceptions have specific requirements; consult IRS.gov for details.
SEPP 72(t): Early Retirement Access Without Penalty
Substantially Equal Periodic Payments (SEPP) under IRS Rule 72(t) allow you to take distributions from your IRA before age 59.5 without the 10% penalty. Payments must continue for the longer of 5 years or until you reach age 59.5.
RMD method
Recalculates payment each year based on account balance and life expectancy divisor. Lower but variable annual payments.
Fixed amortization
Fixed payment calculated once using account balance, life expectancy, and IRS-approved interest rate. Higher and consistent payments.
Fixed annuitization
Uses an annuity factor from IRS tables. Similar to amortization. Most complex calculation.
Warning: modification triggers retroactive penalty
If you modify the SEPP schedule before the required period ends (5 years or age 59.5, whichever is later), the IRS imposes a retroactive 10% penalty on ALL payments made since the plan started, plus interest. This is one of the more punitive provisions in the tax code. Structure the plan carefully with professional guidance.