Qualified Distribution

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Paul Tracy

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Prior to starting InvestingAnswers, Paul founded and managed one of the most influential investment research firms in America, with more than 2 million monthly readers. While there, Paul authored and edited thousands of financial research briefs, was published on Nasdaq. com, Yahoo Finance, and dozens of other prominent media outlets, and appeared as a guest expert at prominent radio shows and i...

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Updated August 5, 2020

What is Qualified Distribution?

A qualified distribution refers to a tax and penalty-free withdrawal from a Roth IRA.

How Does Qualified Distribution Work?

A qualified distribution must meet two main requirements. First, it must occur at least five years after the Roth IRA owner established and deposited funds into his or her Roth IRA. Second, the Roth IRA owner must be at least 59.5 years old or disabled at the time of the distribution, or the distribution must be used for a qualified purchase or the distributions are being made to a beneficiary of the Roth IRA holder after his or her death.

Why Does Qualified Distribution Matter?

If distributions are made that do not meet the criteria, the distribution will be subject to a penalty (usually 10% of the amount of the distribution) and taxes at the current tax bracket of the Roth IRA holder.

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Paul has been a respected figure in the financial markets for more than two decades. Prior to starting InvestingAnswers, Paul founded and managed one of the most influential investment research firms in America, with more than 2 million monthly readers.

If you have a question about Qualified Distribution, then please ask Paul.

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