I have a Roth IRA that took its initial contribution as a rollover from a 401k I had with a previous employer. Since the old 401k's contributions were tax-free I ended up paying income tax on the rollover amount, but no penalties; that was in 2014.

Currently I have a mix of my own contributions along with this rollover and I plan to use the Roth IRA as a saving vehicle that I will eventually use to cash purchase a piece of land or fixer-upper property.

Can I withdraw the rollover amount along with my own contributed principal tax and penalty free? I think I read that I have to wait 5 years from when the rollover occured, so will I have to wait until 2019 to use the rollover principal penalty free (or is it 2020)? I am currently fairly young and won't be anywhere near retirement age in 2020.

I am not talking about touching the growth, just the principal that has already had income tax paid on it. This is in Arizona if that makes any difference, but in a few years we may also be considering a move to Washington State.

2 Answers 2


When you say "Currently I have a mix of my own contributions along with this rollover", do you mean that you have made direct contributions to your Roth IRA? When withdrawing, the ordering is that contributions always come out first, then conversions and rollovers, and lastly earnings. So if the amount you withdraw is less than your direct contributions, it will only come out of contributions and not touch the conversion amount.

But if you withdraw some of the conversion amount within 5 years of the conversion, there will be a penalty. The penalty applies to the part of the conversion that was taxable, which was all of the conversion in your case. There is no "principal" or "earnings" within this conversion -- conversions are counted separately from contributions or earnings in the Roth IRA.

  • 1
    Ok, but after 5 years I can even take out the conversion amount penalty free? That would make sense since I did pay taxes on it in 2014.
    – Ian
    Dec 8, 2016 at 18:00
  • @Ian: yes. . . .
    – user102008
    Dec 8, 2016 at 18:31

The IRS Publication 590b (available for free download on the IRS website) answers your questions. For example, it says

"For example, if you make a conversion contribution on February 25, 2015, and makes a regular contribution for 2014 on the same date, the 5-year period for the conversion begins January 1, 2015, while the 5-year period for the regular contribution begins on January 1, 2014."

So, the five-year period for your 401K conversion rollover started on January 1, 2014, and so you withdraw that amount starting January 1, 2019. Later conversions will have their own 5-year clock as described in the quote above.

There also is a special case of withdrawals for purchasing a first home. See the IRS Publication for more details.

  • Um, I think your example gets it wrong. I'm talking about withdrawing principal contributions. The publication says: "You do not include in your gross income qualified distributions or distributions that are a return of your regular contributions from your Roth IRA(s)." So if I'm returning my regular contributions I can do that at any time without a 5 year limit. My understanding is that the 5 year limit applies to qualified distributions of earnings and rollovers. Right?
    – Ian
    Dec 8, 2016 at 17:14
  • No, Ian, you asked about withdrawing a converted sum. Dilip's answer may address more than you asked, but it also answers the question, as asked. Dec 8, 2016 at 20:40

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