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Qualified distribution- Roth 401(k)

Last Updated June 24, 2009

A distribution from a Roth 401(k) that satisfies certain requirements, resulting in the distribution being tax-free and penalty free. Distributions that are non-qualified may be subject to income tax on amounts attributable to earnings; the non-qualified distribution may also be subject to the 10-percent excise tax (penalty) unless an exception applies. A qualified distribution from a Roth 401(k) is defined as one that meets the following requirements:
1. It occurs at least five years after the Roth IRA owner contributed to his/her Roth 401(k) account (for instance, if the contribution was made for 2007, this five year period begins January 1,2007)…and
2. Meets one of the following requirements
A.   Occurs on or after the Roth 401(k) owner reaches age 59 ½
B.   Occurs as a result of the Roth 401(k) owner is disabled (within the meaning or Internal Revenue Code Section 72(m)
C.   Is distributed to the beneficiaries of the Roth 401(k) owner as a result of the Roth 401(k) owner being deceased.
Referring Cite
IRC §402A (d)(2)
Additional Helpful Information
·         If an individual maintains multiple Roth 401(k)s with different employers, the five-year-period for determining if a distribution is qualified is determined separately for each Roth 401(k) account
·         Distributions from Roth 401(k)s include a pro-rated amount of basis and earnings