DEFINITION of 'Qualified Distribution'
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 59.5 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.
INVESTOPEDIA EXPLAINS 'Qualified Distribution'
Distributions that do not meet the above criteria are considered non-qualified and may be subject to income tax and early distribution penalties.
A withdrawal made from a qualified plan account before the holder ...
An investing tool used by individuals to earn and earmark funds ...
A contract between the owner of an individual retirement account ...
A reportable movement of assets from a Traditional, SEP or SIMPLE ...
The order in which Roth IRA assets are distributed. Assets are ...
1) A distribution from a Roth IRA that occurs before the Roth ...