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February 16, 2009

Nonqualified distribution



A distribution from a Roth IRA or ESA that does not meet the requirements to be treated as a Qualified distribution- ESA  or a Qualified distribution- Roth IRA

Referring Cite

IRC §530, IRS Publication 970, IRC §408A (d)(2), IRC §408A(d)(5), IRS Publication 590

Additional Helpful Information

  • Nonqualified distributions may be subject to income tax and early distribution penalties
  • For Roth IRAs, the ordering rules are used to determine if a distribution is subject to income tax and/or the early distribution penalty
  • For ESAs, the  amount attributable  to earnings on a nonqualified distribution may be subject to income tax and the early distribution penalty

Keep Learning

Qualified Charitable Distribution (QCD)

Definition A distribution that is excludable from the distributee’s income, as a result of meeting the following requirements: It is made after the distributee reaches

Saver’s Credit

Definition Also known as the Saver’s Tax Credit: Nonrefundable tax credit available to eligible individuals who make contributions to their retirement account. The saver’s credit

Catch-up Contribution

Definition An additional contribution that can be made to a retirement plan by a participant who is at least age-50 by the end of the

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IRA Rules