Life · Chapter 11 · IRAs
Roth Qualified vs Non-Qualified Withdrawals
Definition
A withdrawal is qualified (earnings tax-free) only if the account is at least 5 years old AND the owner is 59½+, dies, becomes disabled, or uses it for a FIRST home. Otherwise earnings are taxable — and penalized 10% if under 59½. Contributions always come out first, tax-free (they were after-tax money).
Example
Sarah, 35, account 3 yrs old, $18k contributed, $22k balance, withdraws $20k → $18k tax-free, $2k of earnings taxed + $200 penalty.
Easy to confuse with
These are what this term gets tested against — if you can't tell them apart cold, drill the contrast.
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