Q&A – Withdraw account earnings after five-years

I know I have to leave money in my Roth individual retirement account (IRA) for at least five years before I can withdraw account earnings tax free for a first-time home purchase. I have two Roth IRAs at two different financial institutions. How does the five-year clock work in a situation like mine?

You start the tracking of the five-year period with the taxable year for which a contribution was made to your first Roth IRA. For example, if you opened your first Roth IRA in 2016 with a $2,000 contribution and then put $5,000 in your second Roth IRA in 2017, the five-year clock for both Roth IRAs starts in 2016. You can withdraw earnings tax free from either Roth IRA for a qualifying first-time home purchase (limits apply) as early as 2021.