DEFINITION of 'Distribution'

1. When trading volume is higher than that of the previous day without any price appreciation.

2. The removal of assets from a retirement account. The assets are then paid to the retirement account owner or beneficiary.

3. A company's payment of cash, stock or physical products to its shareholders.

4. Distributions of income and capital gains that mutual funds make to their investors periodically during a calendar year.

BREAKING DOWN 'Distribution'

1. A market that is in distribution has already hit its apex and is expected to decline.

2. The retirement account owner (or beneficiary) may be required to pay income tax on distributions received during the year. Early-distribution penalties may also apply if the distribution occurs while the retirement account owner is under the age of 59.5. While distributions from IRAs can occur at any time, certain requirements must be met before distributions can occur from qualified plans, 457 plans and 403(b) accounts. Participants must check with their employers regarding the rules of the plan.

3. The income that is generated from an investment trust is given to investors through monthly or quarterly distributions. In this manner, distributions are similar to stock dividends; however, they usually offer much higher yields of up to 10% a year. The distributions received reduce a trust's taxable income and, therefore, little or no income tax is paid.

4. Mutual funds pay out interest and dividend income received from their portfolio holdings as dividends (income distribution) to fund shareholders. In addition, capital gains from the portfolio's trading activities are generally paid out (capital gains distribution) at the end of the year.

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