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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

Applicable RMD Age

Applicable RMD Age The first year for which an IRA owner or plan participant must begin to take RMDs from their tax-deferred retirement account. RMDs

SIMPLE 401(k) Plan

Definition A SIMPLE 401(k) plan is a 401(k) plan established by a small business for it’s employees. Earnings accrue on a tax-deferred basis and distributions

Required Minimum Distribution (RMD)

Definition The minimum amount that must be withdrawn from retirement accounts, including qualified plans, 403(b) accounts, 457(b) accounts or IRAs, each year.  For retirement account

Required beginning date (RBD)

Definition The date by which a retirement account owner must begin distributing required minimum distribution (RMD) amounts from a Traditional,  SEP or SIMPLE IRA, a

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IRA Rules