# The Roth IRA Five-Year Rule: The Clock You Only Get Once

> Roth earnings are tax-free only after your first Roth IRA has been open five tax years. How both Roth clocks work, and how to start yours for $100 in 2026.

Source: https://ridleylawoffices.com/roth-ira-five-year-rule-california/
Published: 2026-11-03
Author: Estate Planning Attorney Eric Ridley

Two people take money out of a Roth IRA. One keeps all of it. The other hands part of it to the IRS. What decided it happened years before either of them touched the account, and it comes down to a clock you get once.

Roth earnings come out tax-free only after your first Roth IRA has been open five tax years, and only once you’re over 59½ or the money goes out after death or disability. That five-year clock starts on January 1 of the year you first put money into any Roth IRA, by contribution or by conversion. It runs once, for all of your Roth IRAs, and it never resets ([26 U.S.C. § 408A(d)(2)](https://www.law.cornell.edu/uscode/text/26/408A); [Treas. Reg. § 1.408A-6](https://www.law.cornell.edu/cfr/text/26/1.408A-6), Q&A-2). If you’ve never had a Roth IRA, the cheapest way to fix that is to start the clock now, with a small amount, before you need it.

**1**

Earnings clock per person, for life. It never resets.

**5 tax years**

How long it runs, counted from January 1 of the year it starts

**Dec. 31, 2026**

Last day for a conversion to start the clock in 2026

**Apr. 15, 2027**

Last day for a 2026 contribution, which also starts it in 2026

## The clock that makes your earnings tax-free

Only a Roth IRA starts this clock. Years in a 401(k) or a traditional IRA don’t count, and neither does planning to open a Roth someday. A Roth 401(k) you’ve had for a decade doesn’t count either. If you roll that Roth 401(k) into a Roth IRA, the rollover itself starts the Roth IRA clock if nothing has started it yet, but the years the money sat in the 401(k) don’t come with it ([Treas. Reg. § 1.408A-10](https://www.law.cornell.edu/cfr/text/26/1.408A-10), Q&A-4). The same goes for a Roth solo 401(k), which is a workplace plan for these purposes. See [solo 401(k) vs. SEP IRA](https://ridleylawoffices.com/solo-401k-vs-sep-ira-california/) if that’s your setup.

The clock counts tax years, not 60-month stretches. It starts January 1 of the first year you contribute or convert and finishes at the end of the fifth year. A contribution made by the April tax deadline for the year before counts for that earlier year, so a 2026 contribution made in March 2027 starts your clock on January 1, 2026. Each spouse has a separate clock. One spouse’s Roth doesn’t start the other’s.

Once it’s finished, it’s finished. Opening more Roth IRAs later, or moving money between them, doesn’t start a new one, because each owner has a single period for all of them. One thing doesn’t start it: a contribution you withdraw as a correction before the tax deadline is treated as if you never made it (Treas. Reg. § 1.408A-6, Q&A-2). If your income turns out to be over the limit, a conversion is the safer way in.

## Two people, the same conversion at 65

Open a Roth at 40 with $100 and forget about it. By 45 the clock is done. At 65, when you convert your traditional IRA, everything that later comes out of the Roth is tax-free, earnings included.

Now open your first Roth the day you convert at 65. There’s no penalty, because you’re past 59½, and the converted dollars themselves come out tax-free whenever you take them. What isn’t tax-free yet is the growth on that money. Until the fifth tax year ends, at 69 or 70, any earnings you withdraw are taxed as ordinary income.

How much that costs depends on how fast you spend. A Roth pays out in a fixed order: your contributions first, then converted dollars, oldest conversion first, and earnings last ([§ 408A(d)(4)](https://www.law.cornell.edu/uscode/text/26/408A); Treas. Reg. § 1.408A-6, Q&A-8). Someone who converts $200,000 at 65 and takes out $20,000 a year never reaches the earnings before the clock runs, so the late start costs nothing. Someone who needs most of the account in those first years pays income tax on the growth they reach. Either way, it’s four or five years of waiting that a $100 deposit at 40 would have taken care of.

| | Opened a Roth at 40 | First Roth at 65 |
| --- | --- | --- |
| When the clock starts | January 1 of the year at 40 | January 1 of the year at 65 |
| When it finishes | By 45 | At 69 or 70 |
| $200,000 converted at 65 | Already qualified | Comes out tax-free, but earnings beyond it are taxed for about four years |
| Penalty after 59½ | None | None |

## The second clock only matters before 59½

People mix up the earnings clock with a second one. Every conversion starts its own five-tax-year clock, but that clock only exists to stop people under 59½ from converting and then pulling the money straight out to dodge the 10% early withdrawal penalty ([§ 408A(d)(3)(F)](https://www.law.cornell.edu/uscode/text/26/408A); Treas. Reg. § 1.408A-6, Q&A-5).

Convert $50,000 of pre-tax IRA money at 54 with nothing else in the Roth, take it out at 57, and you owe a $5,000 federal penalty even though you already paid income tax on the conversion. The penalty applies to the part of the conversion that was taxable when you converted, so after-tax dollars, such as a nondeductible contribution you converted, don’t carry it. California adds its own 2.5% tax on early distributions that are included in income, such as Roth earnings taken before 59½ ([Rev. & Tax. Code, § 17085, subd. (c)](https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=RTC&sectionNum=17085)). How the state treats converted dollars is worked out on FTB Form 3805P, so have your preparer run that number before you take money out early.

At 59½ the conversion clock stops mattering. The federal penalty doesn’t apply after that age, so a conversion you made at 58 can come out at 60 without it.

| | The earnings clock | The conversion clock |
| --- | --- | --- |
| How many you get | One, for all your Roth IRAs, for life | A new one with every conversion |
| When it starts | January 1 of the tax year of your first Roth IRA contribution or conversion | January 1 of the year of that conversion |
| How long it runs | Five tax years | Five tax years |
| What it decides | Whether earnings come out tax-free | Whether converted dollars carry the 10% early withdrawal penalty |
| When it stops mattering | Once it finishes, it stays finished | At 59½ |
| Federal authority | IRC § 408A(d)(2)(B); Treas. Reg. § 1.408A-6, Q&A-2 | IRC § 408A(d)(3)(F); Treas. Reg. § 1.408A-6, Q&A-5 |

## When neither clock touches you

If you’re over 59½ and your first Roth IRA is five or more tax years old, neither clock applies to you. Every dollar comes out tax-free, and you can convert whenever the tax bill on the conversion makes sense. Everyone else can work out where they stand from the chart below. Death, disability and the first-home exception change some of these answers, and IRS [Publication 590-B](https://www.irs.gov/publications/p590b) lists them.

| Your situation | What happens |
| --- | --- |
| Over 59½, first Roth IRA five or more tax years old | Neither clock applies. Everything comes out tax-free. |
| Taking out only your own contributions | Tax-free and penalty-free at any age. Contributions come out first. |
| Over 59½, earnings clock still running | Converted dollars come out free. Earnings beyond them are taxed as income, with no penalty. |
| Under 59½, conversion five or more tax years old | No 10% on those converted dollars. Earnings are taxed and carry the 10%. |
| Under 59½, conversion less than five tax years old | 10% on the part of the conversion that was taxable, plus tax and 10% on any earnings. |

## Starting the clock this year

If you’ve never had a Roth IRA, start the clock in 2026. A contribution and a conversion both start it, and their deadlines differ.

**A contribution.** You need earned income, and for 2026 the most you can put in is $7,500, or $8,600 at 50 and older. The amount you’re allowed starts to phase out at modified adjusted gross income of $153,000 single and ends at $168,000. For married couples filing jointly the range is $242,000 to $252,000 ([IRS, Notice 2025-67](https://www.irs.gov/newsroom/401k-limit-increases-to-24500-for-2026-ira-limit-increases-to-7500)). You have until April 15, 2027 to make a 2026 contribution, and it starts the clock on January 1, 2026.

**A conversion.** There’s no income limit on converting, and no minimum. Converting $100 starts the same clock as converting $100,000. The money can come from a traditional IRA, or, if your old employer’s plan allows it, straight out of a pre-tax 401(k) or 403(b) into a Roth IRA, which is taxed the same way ([§ 408A(d)(3), (e)](https://www.law.cornell.edu/uscode/text/26/408A)). Conversions count in the year they happen, so it has to be done by December 31, 2026. If you also have pre-tax money in traditional IRAs, the pro-rata rule makes most of even a small IRA conversion taxable, though on $100 the tax is small. If you have no retirement money to convert, the route is a nondeductible traditional IRA contribution followed by a conversion, and that contribution takes earned income too. An in-plan Roth conversion inside your 401(k) doesn’t start the Roth IRA clock. Rolling a Roth 401(k) out to a Roth IRA does, and it costs no tax.

## Your beneficiaries inherit the clock

The clock doesn’t restart when you die. A beneficiary who inherits your Roth IRA inherits your start date with it, so if your clock had already finished, your children’s withdrawals of earnings are tax-free from day one ([Treas. Reg. § 1.408A-6](https://www.law.cornell.edu/cfr/text/26/1.408A-6), Q&A-7). If you opened your first Roth the year before you died, they wait out the rest of your five years before the earnings are tax-free. A surviving spouse who treats the Roth as their own gets whichever clock finishes first, yours or theirs.

Most non-spouse beneficiaries also have to empty an inherited Roth within ten years, which is a separate rule with its own planning. See [the inherited IRA 10-year rule in California](https://ridleylawoffices.com/inherited-ira-10-year-rule-california/) and [the inherited IRA tax map for California beneficiaries](https://ridleylawoffices.com/guides/inherited-ira/). The beneficiary form on the account, not your trust or will, decides who gets the Roth, so check that it matches your plan. The [beneficiary designation audit](https://ridleylawoffices.com/beneficiary-designation-audit/) walks through it, and [naming a trust as beneficiary](https://ridleylawoffices.com/the-benefits-of-naming-a-trust-as-a-beneficiary/) covers when the trust should be on the form instead of a person.

## Talk to a real California estate attorney

If you’re deciding whether to convert, or who should inherit your Roth, I’ll look at the accounts with you and tell you how they fit your trust. **[Talk to Eric Ridley](https://ridley.click/eric-30)** is a free 30-minute consultation by phone or Zoom, anywhere in California. Or call [(805) 244-5291](tel:+18052445291). I’m not your tax preparer, so bring yours into the conversion decision too.

Sources

- [26 U.S.C. § 408A](https://www.law.cornell.edu/uscode/text/26/408A)
- [Treas. Reg. § 1.408A-6](https://www.law.cornell.edu/cfr/text/26/1.408A-6)
- [Treas. Reg. § 1.408A-10](https://www.law.cornell.edu/cfr/text/26/1.408A-10)
- [IRS, 2026 IRA and 401(k) limits (Notice 2025-67)](https://www.irs.gov/newsroom/401k-limit-increases-to-24500-for-2026-ira-limit-increases-to-7500)
- [IRS Publication 590-B](https://www.irs.gov/publications/p590b)
- [Rev. & Tax. Code, § 17085](https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=RTC&sectionNum=17085)

## Frequently asked questions

### When does the Roth IRA five-year clock start?

January 1 of the first tax year for which you made a contribution or conversion to any Roth IRA (Treas. Reg. § 1.408A-6, Q&A-2). A 2026 contribution made by April 15, 2027 starts it on January 1, 2026. One clock covers all of your Roth IRAs for life.

### Does a Roth 401(k) count toward the Roth IRA five-year rule?

No. Years in a Roth 401(k) don’t count toward the Roth IRA clock. Rolling a Roth 401(k) into a Roth IRA starts the Roth IRA clock if it hasn’t started already, but the 401(k) years don’t carry over (Treas. Reg. § 1.408A-10, Q&A-4).

### Does every Roth conversion have its own five-year rule?

Yes, but it only matters before 59½. Each conversion starts its own five-tax-year period for the 10% early withdrawal penalty (26 U.S.C. § 408A(d)(3)(F)). After 59½, the penalty doesn’t apply and that clock stops mattering.

### Is there an income limit on Roth conversions?

No. Anyone can convert traditional IRA money to a Roth IRA, in any amount. Contributions are limited by income: for 2026 the limit phases out between $153,000 and $168,000 single and $242,000 and $252,000 married filing jointly (IRS Notice 2025-67).

### Do beneficiaries have to wait five years on an inherited Roth IRA?

Only for whatever is left of the owner’s clock. The five-year period isn’t restarted at death, so a beneficiary takes earnings tax-free once the owner’s period would have ended (Treas. Reg. § 1.408A-6, Q&A-7).

### Does California tax early Roth IRA withdrawals?

California adds a 2.5% tax on the part of an early distribution that’s included in income, on top of the federal 10% (Rev. & Tax. Code, § 17085, subd. (c)). Roth contributions and qualified distributions aren’t included in income, so they’re not hit.

Related reading: [retirement accounts and beneficiary planning](https://ridleylawoffices.com/beneficiary-retirement-planning/), [when the beneficiary form and the will disagree](https://ridleylawoffices.com/beneficiary-designation-vs-will-california/), [the inherited IRA distribution calculator](https://ridleylawoffices.com/inherited-ira-calculator/), and [inherited IRA](https://ridleylawoffices.com/estate-planning-glossary-california/inherited-ira/).

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**Written by Eric D. Ridley.** Estate Planning Attorney at Ridley Law, serving Ventura County since 2010. Last reviewed November 3, 2026. [Learn more about Eric →](https://ridleylawoffices.com/about/)