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When to Tap Your Roth Earnings
by Kimberly Lankford

I am 61 and want to make a tax-free withdraw from my Roth IRA. I started the Roth in 1998 and made contributions in 1999. I have not made contributions since then. Can I withdraw the entire amount tax-free this year or did the 1999 contribution start a new five-year test, pushing my tax-free access up to 2005?

First, you can withdraw the total of your Roth contributions tax- and penalty-free at any time. The five-year rule comes into play for determining when you can get the earnings tax-free. And there's just one five-year test. It does not restart with each contribution. Because you opened your account in 1998, the five-year clock started ticking on January 1 of that year and the hands-off period ended December 31, 2002.

In addition to passing the five-year test, to get at earnings tax-free a Roth owner must generally be over age 59½ or tapping earnings for the purchase of a first home. You're home free.

For more information about IRAs and retirement-saving strategies, see Get the Most Out of Your IRA. For more details about the rules on IRA withdrawals, see IRS publication 590, Individual Retirement Arrangements.