Before withdrawing from a Roth IRA, account holders must consider their ages, whether the account has been open for less than five years and, in some cases, how the distribution will be used. These factors determine whether the earnings withdrawn from a Roth IRA are subject to taxes and penalties. Unlike a traditional IRA, there are no taxes or penalties on the withdrawal of Roth IRA contributions.
There are no penalties on earnings withdrawn from Roth IRA accounts when the holders are over the age of 59 1/2. However, account holders over the age of 59 1/2 cannot withdraw earnings from a Roth IRA tax-free if the account is less than five years old. For those under the age of 59 1/2, the question of taxes and penalties on Roth IRA earnings becomes more complex. Withdrawn earnings are always subject to taxes if the account is less than five years old. However, penalties are waived if the withdrawal is used for a first-time home purchase, is for educational expenses, is due to disability or death, or is used for out-of-pocket medical expenses and insurance premiums for unemployed account holders. These same dispensations apply to the holders of accounts over five years old, except that taxes are also waived.