Qualified Distribution

Posted in Finance, Accounting and Economics Terms, Total Reads: 981

Definition: Qualified Distribution

To understand qualified distribution one has to first know about the Roth IRA. It is a post-retirement savings account to which individuals can make contributions with after-tax money. If certain requirements are matched, distributions from the Roth IRA will be declared tax-free. The Roth IRA stands for, Individual Retirement Account. Now the question why establish a Roth IRA?

The Roth IRA is a superb supplement to a professional’s retirement nest egg. It accumulates earnings on a tax-deferred basis, but these amounts earned are tax free if meeting certain requirements. For Roth IRAs, contributions may not be tax deductible but qualified distributions are generally tax free. Contributions to the Roth IRA are based on discretion, so people have a choice when they want to fund their Roth IRA.

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