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June 24, 2009

Qualified distribution- Roth 401(k)

Your Guide



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

Written By

Denise Appleby

Denise is CEO of Appleby Retirement Consulting Inc., a firm that provides IRA resources for financial/ tax/legal professionals. She has over 20 years of experience in the retirement plans field, which includes training and technical consultation.

Denise writes and publishes educational /marketing tools for advisors; available at Denise co-authored several books on IRAs

Denise is a graduate of The John Marshall Law School, where she obtained a Masters of Jurisprudence in Employee Benefits, and has earned 5 professional retirement designations.
She has appeared on numerous media programs, sharing her insights on retirement tax laws.


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