Other Criteria

• If your Roth IRA has been open for five years, you must also be 59 1/2 years old or permanently disabled to avoid all penalties. In addition, the IRS allows you to take out up to $10,000 tax-free and penalty-free if you use it to purchase a first home. If you do not meet these criteria, your distribution from your Roth IRA does not count as a qualified distribution, so taxes and penalties may apply.
  
  

Contributions Versus Earnings

• If you do not meet all the criteria for a qualified Roth IRA distribution, you may still avoid income taxes and penalties if the amount of your distribution does not exceed your total contributions to the Roth IRA. The IRS allows you to remove any of your contributions without paying income taxes or tax penalties for any reason. However, if your withdrawal takes out earnings, you must count that portion of the withdrawal as taxable income and pay a 10 percent early withdrawal penalty.
  
  

Counting Five Years

• The IRS does not count the age of your account from the specific day that you make your first Roth IRA contribution. Instead, the age is counted from Jan. 1 of the tax year you make the first contribution. This difference matters because you can make your contribution for the year as late as the tax deadline of the following year. For example, you could make your 2012 contribution as late as April 15, 2013. However, the age of the account would still be counted from Jan. 1, 2012.
  
  

Conversion Considerations

• The IRS imposes a separate five-year waiting period for conversions to Roth IRAs than the Roth IRA five-year requirement. For example, if you have a Roth IRA opened in the 2004 tax year, but you converted money from a 401k plan to your Roth IRA in 2009, you would have to wait until 2014 to take a qualified withdrawal of the converted money. However, you could, assuming you meet the other criteria, take qualified distributions of the other money in your Roth IRA in 2009.