Penalty-Free Roth IRA Early Withdrawals: First Homes & College

Ordering Rules Work in Your Favor

Under IRS ordering rules for Roth IRAs, distributions come out in this exact sequence:

1. Regular Contributions (always tax-free and penalty-free)
2. Conversions (tax-free, penalty-free if 5-year holding rule is met)
3. Earnings (taxable and subject to 10% penalty unless an exception applies)

Qualified Exceptions for Earnings Before 59½

• First-Time Home Purchase: Up to a $10,000 lifetime limit for a qualified home acquisition.
• Higher Education Expenses: Tuition, fees, and books for yourself, spouse, or children.
• Substantially Equal Periodic Payments (SEPP / Rule 72(t)): Structured annuity-like distributions.