◈ GLOSSARY · RETIREMENT
Qualified Distribution.
A definition, in plain English — with the books that teach it.
Reviewed by ClearValue Editorial Team · Jun 27, 2026
◈ DEFINITION
What it means
Definition
A withdrawal from a retirement account that meets the IRS rules to avoid penalty and, in a Roth, avoid tax on earnings. For a Roth IRA: account open at least 5 years AND you're 59½ or older (or meet a narrow exception like first-time home purchase up to $10,000, disability, or death). Take the money out early and miss the rules, and you can owe ordinary income tax on earnings plus a 10% penalty.
◈ IN PRACTICE
Example
Opened a Roth IRA at 50 with a $7,000 contribution; at 56 you withdraw $10,000 of growth — fails the 59½ test, so the earnings portion is taxable plus 10% penalty even though the 5-year clock is satisfied.