• A qualified distribution is a tax-free and penalty-free exit from a qualified retirement plan, such as a 401(k) or 403(b) plan.
  • Qualified distributions come with conditions set by the IRS so investors don’t shy away from paying taxes.
  • Tax deferral plans require account holders to be at least 59.5 years of age at the time of distribution termination.
  • Roth IRAs also require the account to be open for at least five tax years.
  • The taxable portions of non-qualifying distributions are subject to a 10% IRS penalty for early withdrawals.