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Qualified Distribution
What does it mean?
Distributions made from a Roth IRA that are tax and penalty free. In order to be a qualified distribution, the following two requirements must be met:
1) It must occur at least five years after the Roth IRA owner established and funded his/her first Roth IRA
2) At least one of the following requirements must be met:
a) the Roth IRA holder must be at least age 59 ½ when the distribution occurs
b) Distributed assets limited to $10,000 are used towards the purchase or rebuilding of a first home for the Roth IRA holder or a qualified family member.
c)the distribution occurs after the Roth IRA holder becomes disabled
d)the assets are distributed to the beneficiary of the Roth IRA holder after his/her death.
In Other Words...
Distributions that do not meet the above criteria are considered non-qualified and may be subject to income tax and early distribution penalties.
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Related Terms
In-Service Withdrawal | IRA | IRA Adoption Agreement and Plan Document | IRA Conversion | Non-Qualified Distribution | Ordering Rules | Recharacterization | Reconversion | Required Minimum Distribution | Roth IRA | Spousal IRA | Triggering Event
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