Ask an Advisor: When Can I Withdraw the $10K I Converted When I was 72?

I converted $10,000 from a traditional IRA to a Roth IRA when I was 72 years old. When can I withdraw this money without a penalty? I am currently 73 years old. – William

The short answer is you can withdraw those converted funds from your Roth IRA at any time without incurring a penalty. That’s because you’re over 59 ½, the cutoff for the early withdrawal penalty. Earnings generated by the converted funds, however, are subject to a separate set of rules. In short, you’ll need to wait a few more years before you have access to the earnings tax-free, unless you qualify for an exception.

If you have similar questions regarding Roth conversions or other retirement planning topics, speak with a financial advisor. 

The 5-Year Rule for Roth Conversions

Let me start by explaining why you’re free to withdraw your conversion. Any time you convert money from a pre-tax account, such as a 401(k) or a traditional IRA, to a Roth IRA, two things happen:

1. You pay income tax on the converted amount at your current ordinary income tax rate. 
2. A five-year waiting period begins, there may still be taxes on earnings attributable to those converted funds.

For example, a conversion that takes place in any month in 2026 will be eligible for withdrawal starting on Jan. 1, 2031. Each conversion starts a new clock.

During the five-year waiting period, any withdrawals of converted funds are subject to a 10% early withdrawal penalty, unless, as in your case, the account owner is over age 59 ½. In that case, the 10% early withdrawal penalty does not apply.

(And if you need help finding a strategic balance between Roth and pre-tax accounts, talk it over with a financial advisor.)

The 5-Year Rule for Earnings

Here’s where it gets a bit tricky. Even though you’ve aged out of early withdrawal penalties, there may still be taxes on earnings attributable to those converted funds. It all comes down to when you opened the Roth IRA. 

If you first funded any Roth IRA at least five years ago, you can withdraw earnings attributed to the conversion (or any other direct contributions) tax-free. There are two reasons this is true: 

1. You’re over age 59 ½
2. You met the five-year account rule

If your first contribution to the account occurred less than five years ago, earnings you withdraw are subject to income tax, even at your current age. So, waiting until the five-year period is met means you’d save yourself a tax bill. 

(And if you need help navigating these rules, connect with a financial advisor with retirement planning experience.)

That said, certain exceptions would allow someone to avoid the tax on withdrawals of earnings even if they’re under 59 ½, including: 

• Permanent and total disability
• Inheriting a Roth IRA
• Using up to $10,000 for a first-time home purchase

See how contributing to a pre-tax retirement account or doing a Roth conversion could affect your tax bill. Use our income tax calculator to estimate the impact.

A Hypothetical Inheritance

There’s yet another set of rules for inherited IRAs that you might want to understand for legacy planning. 

Let’s say you name your nephew as the beneficiary of your Roth IRA and then pass away in two years, at age 75. Your $10,000 conversion would have happened three years earlier. 

Your five-year clock would still have two years remaining, assuming no direct contribution was made to the account before you did the conversion. This means your nephew would not be able to withdraw earnings tax-free from the inherited Roth IRA until the five-year clock runs out. In the meantime, however, he would still have access to the converted funds tax- and penalty-free. As a non-spouse beneficiary, your nephew is required to empty the account by December 31 of the 10th year after your death.

If you left the Roth IRA to a spouse, on the other hand, they would have a few more options, including treating the account as their own, meaning the 59 ½ and five-year rules apply but there’s no timeline for emptying the account.

Bottom Line

To reiterate, you’re free to withdraw your Roth conversions (or any direct contributions you made previously) at any time, since you’ve met the age requirement. To avoid taxes on earnings, however, you must satisfy the five-year rule based on when you first funded any Roth IRA. 

Parsing the IRA withdrawal rules, especially for anyone with multiple accounts holding both direct contributions and conversions, can be utterly maddening. Consulting a financial advisor to help you devise a tax-efficient withdrawal strategy can minimize frustration and surprise tax bills down the line.

Retirement Planning Tips

• Financial advisors can do more than just manage investments. Certain advisors specialize in helping clients plan for retirement or pursue other goals. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
• Instead of focusing only on how much you’ve accumulated, translate your assets into sustainable monthly income. A portfolio value doesn’t tell you much on its own, but estimating withdrawals alongside Social Security or pension income gives you a clearer picture of what your lifestyle might look like.

Tanza Loudenback, CFP® is a financial planning columnist who answers reader questions on personal finance topics. Got a question you’d like answered? Email AskAnAdvisor@smartasset.com and your question may be answered in a future column.

Please note that Tanza is not an employee of SmartAsset and is not a participant in SmartAsset AMP. She has been compensated for this article. Some reader-submitted questions are edited for clarity or brevity.

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