Which statement best describes the Roth IRA tax-free withdrawal requirement?

• A. 59 1/2 and 5 years
• B. 59 1/2 only
• C. 5 years only
• D. All withdrawals are tax-free

Answer: (A)

The tax-free withdrawal for a Roth IRA depends on it being a qualified distribution, which requires two conditions to be met. You must be at least 59 1/2 years old and the Roth account (the five-year holding period) must have been in place for at least five years. When both conditions are satisfied, the distribution is completely tax-free and penalty-free. If either condition isn’t met, the earnings portion of the withdrawal may be taxable and could incur penalties, though contributions can be withdrawn tax-free at any time. So, the statement that tax-free withdrawals require both age 59 1/2 and five years best describes the rule.