How to Withdraw Roth IRA Contributions: A Guide for High-Earning Families

By Kevin Luu, Co-Founder and Chief Learning Officer. Reviewed on 2026-09-30.

To withdraw Roth IRA contributions, ask your custodian for a distribution of up to the total you have contributed directly over the years, then report it on Form 8606, Part III, with your tax return. Your regular contributions always come out first, and they come out with no federal income tax and no 10% early withdrawal penalty at any age. Tax and penalty questions only start once a withdrawal reaches past your contributions into conversions or earnings.

That is the short answer. For a high-earning family, the part that takes care is the second layer. Most households at $750,000 and up have been shut out of direct Roth contributions for years (for 2026 the Roth IRA income phase-out for joint filers is $242,000 to $252,000 of MAGI, per IRS Notice 2025-67). Their Roth IRA is usually a mix of old direct contributions from earlier in their careers, backdoor Roth conversions, maybe a rollover from a 401(k), and earnings. Each layer follows its own rule, and the IRS decides which layer you are touching, not you.

The order the IRS uses for every Roth IRA withdrawal

IRS Publication 590-B sets a fixed ordering rule for any Roth IRA distribution that is not a “qualified distribution” (Pub 590-B, Ordering Rules for Distributions):

1. Regular contributions. Money you put in directly. Always tax free and penalty free.
2. Conversion and rollover contributions, oldest year first. Within each conversion, the part that was taxable when you converted comes out before the part that was not.
3. Earnings. Last out, and the only layer that can be taxed as income.

Two more rules shape the math. First, all of your own Roth IRAs count as one: if you have a Roth IRA at two brokers, the IRS adds them together. Your spouse’s Roth IRAs are a separate pile, even on a joint return, because every IRA belongs to one person. Second, a Roth 401(k) is not part of this pile. Workplace Roth accounts follow different distribution rules, so do not assume the “contributions first” logic carries over to your plan at work.

A distribution is “qualified”, meaning fully tax free including earnings, when it comes after the 5-year period that starts with the first tax year you funded any Roth IRA, and you are 59½ or older, disabled, a beneficiary, or using up to $10,000 (lifetime) toward a first home. For a parent in their late 30s or 40s, the age test usually is not met yet, so the ordering rule is what matters.

Why backdoor Roth money is usually easier to reach than people think

Each conversion has its own 5-year clock, starting January 1 of the year you converted. If you withdraw converted money before that clock runs out and you are under 59½, the 10% penalty applies, but only to the part of the conversion that was taxable when you converted (Pub 590-B, “Distributions of conversion and certain rollover contributions within 5-year period”).

A clean backdoor Roth is a nondeductible traditional IRA contribution converted soon after. Almost none of it was taxable at conversion, because you had already paid tax on the money. So withdrawing it early typically triggers neither income tax nor the 10% penalty. The exception is the family that converted while holding a pre-tax IRA balance (an old 401(k) rollover, for example). The pro-rata rule then made much of each conversion taxable, and that taxable part is what the 5-year clock protects. Your Form 8606 from each conversion year shows which situation you are in.

Worked example: a Palo Alto family with $1.1 million of W-2 and RSU income

Assumptions (illustrative): married filing jointly, both parents age 41, two children ages 4 and 8, California residents, 2026 taxable income of about $1.05 million. They want $60,000 from the Roth IRA in 2026 for a home renovation. Their Roth IRAs total $210,000 across both spouses. To keep the math simple, assume each spouse holds exactly half of every layer below and each spouse withdraws $30,000, because the ordering rules run separately for each spouse’s IRAs:

How the $60,000 is sorted: for each spouse, the first $15,000 is regular contributions, so it is tax free and penalty free. The next $15,000 comes from that spouse’s oldest backdoor conversions. Because those conversions were nontaxable, there is no income tax and no 10% penalty, even on any conversion still inside its 5-year window. Across both spouses that is $30,000 of contributions and $30,000 of conversions. Total tax on the $60,000: $0. Earnings are not touched.

The same request, with a taxable conversion instead. Change one assumption: they never did backdoor conversions. Their second layer is $100,000 of old 401(k) rollover IRA money they converted in 2024 ($50,000 each), paying full income tax on it that year. Now the $15,000 each spouse takes beyond contributions, $30,000 in total, comes from the taxable part of the 2024 conversions, which are still inside their 5-year window (it runs through 2028). No income tax is due again, but the 10% federal penalty applies: $3,000. California has its own 2½% additional tax on early distributions (FTB 3805P, 2025). If it applies to this amount, it would add about $750, but the California figure can differ from the federal one when your California basis differs, so confirm it on the state return. Waiting until 2029 to take that layer would avoid the federal penalty.

What reaching into earnings would cost. If they withdrew $10,000 of earnings at 41 with no exception, it would be ordinary income. At their income that means the 37% federal bracket (it starts at $768,700 of taxable income for 2026, per Rev. Proc. 2025-32) plus the 10% penalty, which is $4,700. California would tax it at a combined 12.3% (11.3% bracket plus the 1% Behavioral Health Services Tax on taxable income over $1 million, using 2025 rates, the latest published) plus the 2½% state additional tax, which is $1,480. Roughly $6,180 of the $10,000 would go to tax.

The Washington version

A Seattle family in the same position would owe the same federal amounts. Washington has no wage income tax in 2026, and its 7% capital gains tax does not apply to retirement accounts (WA DOR), so the $10,000 earnings withdrawal would cost about $4,700. One caution for planning ahead: Washington enacted a 9.9% income tax on AGI over $1,000,000 starting January 1, 2028 (WA DOR, SB 6346). How it will treat retirement distributions is pending state guidance, so a WA household above $1 million should not assume Roth earnings withdrawals stay state-tax free after 2027.

How to withdraw Roth IRA contributions, step by step

1. Rebuild your contribution basis. Add up every direct Roth contribution you have made, net of anything you have already withdrawn. Sources: Form 5498 from each custodian (it reports Roth contributions and conversions for each year) and any Form 8606 you filed. If you moved brokers, the new custodian usually does not know your history. Keeping that record is your job, not the broker’s.
2. List conversions by year and taxable amount. Pull Form 8606 for each conversion year. This tells you whether the second layer is penalty-exposed.
3. Request the distribution. Most custodians let you do it online. Choose cash or shares (an in-kind transfer to a taxable brokerage account counts as a distribution of the shares’ value). You will be asked about federal withholding; on a return of contributions there is typically no tax to withhold for.
4. Expect a Form 1099-R in January. Under 59½, it will usually show code J (early distribution, no known exception). That code does not mean you owe tax. It means the custodian does not track your basis.
5. File Form 8606, Part III with your return to show the withdrawal came from contributions. Add Form 5329 if any part is subject to the 10% penalty or you are claiming an exception, and FTB 3805P on the California return if the state additional tax applies.

Penalty exceptions that matter for parents

These only matter once a withdrawal reaches the taxable part of conversions or earnings. Pub 590-B lists the federal exceptions; California does not adopt all of them, so check the state side separately. The ones most relevant to families with young children:

• Birth or adoption: up to $5,000 per parent within one year of a birth or finalized adoption, so up to $10,000 for a couple. Income tax on earnings still applies; only the 10% penalty is waived.
• Qualified higher education expenses for you, your spouse, children or grandchildren. A 529 plan is usually the better tool for this, because Roth money spent on college is money that stops compounding tax free for retirement.
• First home: up to $10,000 lifetime per person, which is also one route to a fully qualified distribution once the 5-year period is met.
• Disability, unreimbursed medical expenses over 7.5% of AGI, and substantially equal periodic payments.

The decision behind the withdrawal

Being able to take contributions out freely does not mean it is the cheapest money you have. Roth dollars are among the few dollars in a high-earner household that can grow and come out tax free with no required minimum distributions for the owner. A $30,000 contribution withdrawn at 41 is $30,000 that cannot go back in through the front door, because your income is above the phase-out. To replace it you would need the backdoor route (limited to $7,500 per person for 2026) or, if your employer plan allows it, a mega backdoor Roth.

For most families at this income, the order to consider is: cash reserves and taxable brokerage first (where California taxes gains as ordinary income, but you choose which lots to sell), then Roth contributions, and Roth earnings only as a last resort. Running the numbers for both the federal and state side before you request the distribution takes an hour and can move the result by thousands of dollars.

Common mistakes

• Losing the basis record. Without old 5498s and 8606s, you may not be able to prove the withdrawal was contributions, and the burden of showing that a code J distribution was contributions sits with you.
• Confusing the two 5-year rules. One clock (from your first Roth IRA contribution) decides whether earnings are tax free. A separate clock for each conversion decides whether the 10% penalty applies to converted money. Neither clock locks up your regular contributions.
• Treating a Roth 401(k) like a Roth IRA. In-plan withdrawal rules differ. Rolling a Roth 401(k) into a Roth IRA has its own basis and 5-year consequences, so check them before relying on that money.
• Assuming California follows every federal rule. California does not conform to all federal exceptions to the early distribution tax, and it taxes 529-to-Roth IRA rollovers as income plus the 2½% additional tax, even though they are tax free federally (FTB 3805P instructions, 2025).
• Using the Roth as a short-term loan. An IRA has no loan feature. Money you take out generally cannot be put back except within the narrow rollover rules.

What to write down for your children

A custodial Roth IRA for a child with real earned income follows the same ordering rules, so the habit of tracking basis carries forward to them. More useful than the spreadsheet is a short note on why you did or did not tap the Roth: what the money was for, what else you considered, and what it cost. That is the kind of decision your kids will face themselves in 25 years. Conversations fade. Documentation compounds.

Frequently asked questions

Are Roth IRA withdrawals taxable?

Withdrawals of your regular contributions are never taxable. Qualified distributions (after the 5-year period and at 59½ or another qualifying event) are fully tax free, earnings included. Only earnings withdrawn in a nonqualified distribution are taxed as ordinary income, and the 10% penalty may also apply to them and to the taxable part of recent conversions.

At what age can I withdraw from a Roth IRA without penalty?

Contributions can come out at any age without penalty. Earnings come out tax and penalty free at 59½, as long as your first Roth IRA was funded at least five tax years earlier. Before 59½, the penalty on earnings and on recent taxable conversions can be avoided only through an exception such as disability, birth or adoption, or a first home.

Do Roth IRA withdrawals count as income?

A return of contributions or a qualified distribution is not included in gross income, so it does not raise your AGI. Taxable earnings from a nonqualified distribution do count as income, which at this income level stacks on top of wages and RSUs at your highest marginal rate.

Next step: before you request a distribution, gather your Forms 5498 and 8606 and write down your contribution and conversion totals by year. If you want a second set of eyes on the federal and California or Washington math, our retirement and employee benefits and tax management work starts there. Related reading: when you can withdraw from a Roth IRA, whether moving brokers resets the 5-year rule, mega backdoor Roth withdrawal rules, and custodial Roth IRAs for children.

This is general education, and the right move depends on the family’s full picture.

Written by

Kevin Luu

Co-Founder and Chief Learning Officer, Bright Advisers

Kevin has advised high-income W-2 tech and biotech families since 2015, and leads the education-first Age Five Family Office from Brea, California.

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