Jacob: Hello, and welcome back to Retirement Answers. My name is Jacob Duke. I'm a certified financial planner based in Little Rock, Arkansas working with clients all throughout the South. I appreciate you being here today. We've got a quick question here from Doug, and Doug is asking whether or not he can take distributions from his Roth IRA before fifty nine point five.
So he's 52 and he is curious because a friend mentioned to him that he should and can take money from his Roth IRA for 59 and 0.5 which is the standard IRS rule. We all know that rule being 59 and a half that's the same for IRAs, 401Ks, 403Bs, TSPs, the whole thing right? The general rule barring any exceptions won't get into all of those different kind of nuances right now today, but the general rule is if you are under age 59.5 technically you're not able to get money out of your retirement accounts without some sort of penalty or tax. So today's question from Doug is going to be around he's 52 and should should he or can he take money from his Roth IRA without any issues penalties or taxes and the short answer is yes Doug you can take money from that account. We're gonna dive into how that works.
So the main thing to know is that on a Roth IRA, regardless of your age, you can take your contributions out of that account at any point, no questions asked. Okay. So let's, for example, say that you've put in $50,000 of your after tax money into a Roth IRA and now that money is worth 150,000. Right? So there's a $100,000 of growth in that account, but you remember you've put in $50,000 of the total balance.
At any point, no questions asked, no no regard to your age, you can take that $50,000 out of your account and no problem. The reason being is remember we put after tax dollars into the account. The IRS has already gotten their tax money on it and therefore they kind of don't put as many rules around that because it's your money. You've paid the taxes, you own it, not a big deal. What you cannot touch before 59.5 is any growth that has happened in that account.
That is subject to the fifty nine point year old rule where let's say the $100,000 of growth in this situation that is not eligible to be touched until you do reach 59 and a half and the account has been open for five years. Okay, so two major things. It's not an or, it's an and. You have to be 59 and 0.5 to get the growth out and you have to have the account open for at least five years before you do so. So that's something that is often confusing as well.
Someone will open an account up at age 57 and they want to take money out at 60 after they reach 59.5. Well, you can take your contributions out, you cannot take any growth out because you've not reached that five year rule even though you are older than 59.5. So a couple different things to consider there. One thing to pay attention to is now that we know that we can take out contributions from a Roth IRA at any point without an issue, Does that mean that we have to do we have to take distributions as a percentage of total assets or what order does the money come out? Does it come out, contributions first and growth second or or how does that work?
And so just to kinda give you a little bit of background on that, the order of operations for taking money out of a Roth IRA is always your contributions come out first, meaning you can get to them, no taxes, no penalty. Next, any conversions that you've done, Roth conversions that you've done, that money is gonna come out next assuming that you have met the five year conversion rules. So if you make a Roth conversion today, technically, you can't take money that money out without tax or penalty until five years down the road. Because in five years, it is credited to you as a contribution at that point, and that would fall into the contributions. So that's kind of a different five year rule.
But number one, going back to our list. Number one, your contributions come out first. Number two, any conversion amounts come out second. And then third, any growth that has happened. That's the order of operations for distributions from a Roth IRA.
So, Doug, to answer your question, yes, you can absolutely take money out of your Roth IRA at age 52 without an issue. You can do so up to the amount you've contributed to the account being $50,000 in our, you know, example here. Anything over the $50,000 is subject to that fifty nine and a half and five year rule where you would not have to pay the tax if you have accommodated both of those rules. So if you start taking out your growth at 52, like you said, then you would begin paying the 10% penalty and the tax on that is what you would begin paying on those distributions above your contributions. So I hope that's helpful, Doug, and, that answers your question for you.
If you think this is something that might be beneficial for a friend or family member to hear, please do share it with them, and, I hope this has been a helpful episode for you. With that being said, I look forward to seeing you next week.