Your Roth basis is the total amount of your own money you have put into a Roth IRA, separate from any earnings that money made over time.

When you contribute money to a Roth IRA from your paycheck or savings, that contribution becomes your basis. The earnings—the interest, dividends, and investment gains your money makes inside the account—are not part of your basis. This distinction matters because you can withdraw your basis at any time without penalty or taxes, but the earnings have rules attached.

Think of it this way: if you put $5,000 into a Roth IRA and that money grows to $6,500, your basis is $5,000. The $1,500 in growth is earnings. You own both, but the IRS treats them differently when you take money out.

Key Takeaways

  • Your basis is only the money you contributed yourself, not the growth that money earned inside the account.
  • You can withdraw your basis from a Roth IRA at any age without taxes or the 10% early withdrawal penalty.
  • The IRS tracks your basis across all your Roth IRAs combined, so opening multiple accounts does not change the rules.
  • Earnings can only be withdrawn tax-free and penalty-free after age 59½ and once the account has been open for at least five tax years.

How the IRS tracks your basis

The IRS does not track your basis for you. You track it. When you file your tax return, you report your Roth contributions on Form 8606, which is the official record of how much basis you have built up over time.

Your basis is cumulative across all Roth IRAs you own. If you have a Roth IRA at one bank and another at a different bank, the IRS counts them as one account for basis purposes. If you contributed $3,000 to the first account and $2,000 to the second, your total basis is $5,000, and you can withdraw that $5,000 from either account or split between them.

Conversions—moving money from a traditional IRA into a Roth—also add to your basis, but the rules are more complex. A conversion contribution counts as basis in the year you convert it, but only the amount you actually converted, not any earnings it made before the conversion.

Why basis matters when you withdraw money

The reason basis exists as a concept is that Roth contributions are made with after-tax dollars. You already paid income tax on the money before it went in. The IRS lets you take that money back out without paying tax again or facing penalties, because you already paid.

Earnings, by contrast, were never taxed. They grew inside the account tax-free. The IRS wants to tax those earnings eventually, so it restricts when you can take them out. You can withdraw earnings penalty-free only after you turn 59½ and have held the account for at least five tax years. Before that, earnings come out with a 10% penalty plus income tax.

When you withdraw money, the IRS assumes you withdraw basis first. If you have $5,000 in basis and $1,500 in earnings, and you withdraw $4,000, that $4,000 is treated as coming from your basis. You owe nothing. If you withdraw $6,500 (everything), the first $5,000 is basis (no tax or penalty) and the $1,500 in earnings is taxed and penalized if you are under 59½.

Basis from regular contributions versus conversions

Regular contributions—money you put in from your own income—count as basis immediately. If you contribute $6,500 in 2024, that $6,500 is basis the moment it lands in the account.

Conversions work differently. When you convert money from a traditional IRA to a Roth, you pay income tax on the converted amount in that tax year. The amount you converted then becomes basis. But if the traditional IRA had earnings, those earnings are taxable in the conversion year, and only the after-tax amount becomes basis in the Roth.

This matters if you are thinking about converting a traditional IRA with both contributions and earnings. The conversion itself is taxable, and the basis you gain is only what you actually convert, not the growth that happened before the conversion.

What happens to basis if you withdraw early

You can withdraw your basis at any age without penalty or taxes. This is one of the main advantages of a Roth IRA—your own money is always accessible. If you need $3,000 and your basis is $8,000, you withdraw $3,000 from basis and owe nothing.

The catch is that you can only withdraw basis. You cannot selectively withdraw earnings and leave basis behind. The IRS assumes withdrawals come from basis first, in order. Once you have withdrawn all your basis, any further withdrawals come from earnings, and those are subject to the age and time restrictions.

If you withdraw basis before age 59½, there is no penalty and no tax. The money is yours. But if you also withdraw earnings in the same withdrawal, those earnings are taxed as income and hit with a 10% penalty unless you meet an exception (like a first-time home purchase, which allows up to $10,000 of earnings to come out penalty-free, though still taxed).

Basis and the five-year rule

The five-year rule applies to earnings, not basis. You can withdraw basis at any time. But to withdraw earnings without penalty, your Roth IRA must have been open for at least five tax years, and you must be 59½ or older (or meet another exception).

The five-year clock starts on January 1 of the tax year you open your first Roth IRA. If you open one in March 2024, the five-year period runs from January 1, 2024, through December 31, 2028. After that, you can withdraw earnings penalty-free if you are 59½.

This rule applies to all your Roth IRAs together. If you have multiple Roth accounts, they all share the same five-year clock. Opening a second Roth IRA does not reset the timer.

How to calculate and track your own basis

Keep a record of every contribution you make. Write down the year, the amount, and whether it was a regular contribution or a conversion. Add them all up. That total is your basis.

If you have been contributing for years and do not have records, you can look at your tax returns. Form 8606 shows your basis for each year. Add up all the basis amounts from all the years you have filed, and that is your total basis.

Your bank or brokerage does not calculate basis for you, though some will show contributions on your statements. The IRS expects you to know your own basis and report it correctly on Form 8606 when you file taxes. If you withdraw money and report it wrong, the IRS can assess penalties and back taxes.

Frequently Asked Questions

Can I withdraw my basis without filing any paperwork?

Yes. You can withdraw your basis at any time without penalty or taxes, and you do not need special permission. Just ask your bank or brokerage to send you the money. You will report the withdrawal on Form 8606 when you file taxes that year, but the withdrawal itself is not taxable.

What if I do not know how much basis I have?

Look at your past tax returns and find Form 8606 for each year you contributed. Add up all the basis amounts listed. If you cannot find old returns, contact the IRS or a tax preparer—they can help you reconstruct your basis from IRS records.

Does my basis go down when the account loses money?

No. Your basis is the amount you contributed, period. If your account drops in value due to market losses, your basis stays the same. If you contributed $5,000 and it falls to $3,000, your basis is still $5,000. You can still withdraw $5,000 without penalty, though the account only holds $3,000, which means you would be withdrawing more than the account contains—which is not possible. You can only withdraw what is actually in the account.

If I convert a traditional IRA, does the whole amount become basis?

Only the amount you convert becomes basis. If your traditional IRA has $10,000 in contributions and $2,000 in earnings, and you convert the whole $12,000, the basis you gain is $12,000. But you owe income tax on the $2,000 in earnings in the year of conversion. The basis is what you converted; the tax is on the earnings portion of what you converted.

Can I withdraw basis from one Roth IRA and leave another untouched?

Yes. Your basis is tracked across all your Roth IRAs combined, but you can withdraw from whichever account you choose. If you have $5,000 basis total split between two accounts, you can withdraw from just one account as long as it has enough money in it.