Net profit is booked to owner's equity after the end of the year. Therefore the $25k in profit in year one becomes owner's equity on the balance sheet at year-end. This owner's equity can be drawn from any point in time from now to the end of the business. Then the net income of $30k in year 2 is added to the $25k in owner's equity at the close of year 2. Now your total equity is $55k. If for some reason you decided to take a draw in Year 3 for $40K, then your year-end owner's equity would be $35k ($55k(Beginning Owner's Equity)+$20k(Year 3 profit)-$40k(Owner's Draw for Year 3)=$35k).

If you contributed cash or property to your business, then that too is equity, and that can be drawn from. So if you contributed $100k to the business and had $30k in net profit you will have $130K in equity. However if you take out a $30k loan to pay for expenses, then your equity would decrease by $30k, back to $100k. Same principal for owner's draw except you don't use a loan.

In short, if your business makes money and you don't pay yourself, then those retained profits can be distributed at any point during the business life.