Pricing, Products, and Refund Policy
CARES Act and Coronavirus Stimulus Retirement Changes
FAQs and the Benefits of Self-Directing Retirement Accounts
Rocket Dollar Crowdfunding Campaign on Republic
Investing and Alternative Asset Classes
Self-Directed IRA (Traditional, Roth, or Beneficiary)
Self-Directed Solo 401(k) (Traditional or Roth)
- Self-Directed Solo 401(k) FAQs
- Opening a Rocket Dollar Self-Directed Solo 401(k) Account
- Structure and Titling
- Contributions and Contribution Limits
- IRS-Related Questions
- Rolling Over/Transferring Old Accounts
- Solo 401(k) Traditional Contributions
- Solo 401(k) Roth Contributions
- Solo 401(k) Loans
- Uncommon Questions
Self-Directing Retirement Compliance and Self Care
Partnering with Rocket Dollar
Fundraising with Rocket Dollar
Specific State Rules
Privacy, Security, Identity, and Fraud
What is the Roth IRA 5-year withdrawal rule?
The Roth IRA, a 5-year rule, allows you to withdraw investment earnings or Roth Conversions without penalty if you keep the gains in an account for at least five years after contributing.
What should I keep in mind?
- The 5-year rule begins on January 1 of the calendar year you made your first contributions (not opening an account) to any Roth IRA. After this, you can withdraw investment earnings (distributions) tax-free.
- You can always withdraw contributions from your Roth IRA at any time. Investment earnings must remain until cleared by the 5 Year Roth Rule.
- If you withdraw Roth investment earnings early, you will incur a 10% tax penalty before the five years.
- You can always withdraw your Roth contributions, as you have already paid taxes on them.
Does this apply to Roth IRA Conversions?
- Yes. The rule is the same, on January first of the year, you made your Roth Conversion. After this, you can withdraw those dollars tax-free.
- You can read more about Roth Conversions here.
Can I do this for my Roth dollars in my Solo 401(k)?
- Yes, you can also do this inside your Rocket Dollar Solo 401(k)
- Make sure your plan allows for in-service distributions
- Remember that the 5-year rule does not carry over to a new Roth IRA. If you open a new Roth IRA, rollovers will be subject to the same waiting period (even if your Roth 401(k) where the money is coming from has existed for over five years). If your other Roth IRA has already lived for five years, you can distribute investment earnings that just came from the old Roth-401(k).
The statements above shouldn't be taken as tax advice. Weigh all decisions and consult a tax professional or financial advisor before making a financial decision.