Roth IRA Qualified Distributions: A Worked Example

Miss either one and the earnings portion of your withdrawal may be hit with a 10% additional tax on top of regular income tax, unless an exception applies. Below, we walk through both prongs using a simple example: an account opened in 2020 with a withdrawal taken in 2025 after age 59½.

The two-part test, plain and simple

If a distribution fails either test, it is treated as non-qualified, and the taxable portion — generally the earnings — can trigger the extra 10% additional tax unless a specific exception applies. This tax applies specifically to the taxable portion of the withdrawal, generally the earnings, separate from any ordinary income tax owed on that same portion.

When the 10% additional tax can apply

A non-qualified distribution from a Roth IRA may trigger the 10% additional tax on the taxable portion of that distribution, which is generally the earnings rather than your original contributions, unless an exception applies. This tax sits on top of any ordinary income tax owed on that same taxable portion, so a non-qualified withdrawal can be more expensive than many people expect. Several exceptions can waive the extra tax even when a distribution isn't fully qualified, including reaching age 59½, disability, first home, or death.

Worked example: opened in 2020, withdrawn in 2025

Assume the account was opened and first funded with a contribution credited to the 2020 tax year, and that this was the taxpayer's first-ever contribution to any Roth IRA. Now assume the withdrawal happens in 2025, after the taxpayer has already turned 59½, which satisfies the age trigger under the second prong of the test. Under these assumptions, the age-59½ trigger has been met. By contrast, a non-qualified distribution can trigger the 10% additional tax on the taxable portion of the withdrawal, generally the earnings, separate from any ordinary income tax owed on that same portion, unless an exception applies, such as age 59½, disability, first-home use, or death.

• opened year: 2020
• start year plus five: 2025
• Formula: start year plus five - opened year
• Result: 5

What changes if either piece is missing

If the same taxpayer had opened the account in 2022 instead of 2020, the earnings portion of a 2025 withdrawal could face the 10% additional tax as a non-qualified distribution, unless a separate exception applied. Conversely, if the account had been open since 2020 but the withdrawal happened before the taxpayer turned 59½ and no other qualifying event (like disability) applied, the distribution would also fail the test and face the same exposure.

Key takeaways

• Non-qualified distributions can trigger a 10% additional tax on the taxable portion, generally the earnings, on top of ordinary income tax.
• In the worked example, an account opened in 2020 with a withdrawal in 2025 after age 59½ satisfies both prongs at once, making the withdrawal qualified.
• A non-qualified distribution may still avoid the 10% additional tax if an exception applies, such as the taxpayer reaching age 59½, becoming disabled, dying, or using the withdrawal toward a first-time home purchase, since each exception carries its own conditions.

Qualified vs. non-qualified: side by side

Scenario	Five-year test met?	Age/event test met?	Result
Account opened 2020, withdrawal in 2025 after age 59½	Yes — five years have passed since the 2020 contribution	Yes — taxpayer already past age 59½	Qualified distribution; only a non-qualified distribution may trigger the 10% additional tax on the taxable portion
Account opened 2022, withdrawal in 2025 after age 59½	No — five-year window not complete until 2027	Yes — taxpayer past age 59½	Non-qualified; earnings may face the 10% additional tax unless an exception applies
Account opened 2020, withdrawal in 2023 before age 59½ and no other exception	Yes — five years have passed since 2020	No — age/event trigger not met	Non-qualified; earnings may face the 10% additional tax unless an exception applies

Comparing three Roth IRA withdrawal scenarios against the qualified-distribution test.

How to check your own withdrawal

1. Review your own Roth IRA account records and, if needed, a tax professional to determine when your five-year period began and whether it has closed.
2. Confirm whether your 2025 withdrawal, if any, would occur after you have already reached age 59½, since that is the age trigger used in this article's worked example.
3. If you cannot confirm both the five-year period and a triggering event apply to your situation, assume the earnings portion could be subject to the 10% additional tax unless a specific exception applies, and review your situation before withdrawing.

In the article's worked example, does turning 59½ before a 2025 withdrawal satisfy the age part of the test?

Yes — for that hypothetical taxpayer, the assumption used in this article is that the 2025 withdrawal happens after the taxpayer has already reached age 59½, which satisfies the age trigger under the second prong of the qualified-distribution test.

In the worked example, does opening the account with a 2020 contribution matter for the five-year test?

Yes — the article's worked example assumes the account was opened and first funded with a contribution credited to the 2020 tax year, and that this was the taxpayer's first-ever contribution to any Roth IRA.

This explainer covers the general structure of the qualified-distribution test under IRS Publication 590-B and a hypothetical example; it is not personalized tax advice, and your own contribution history, account types, and any exceptions that might apply should be reviewed directly against your records or with a tax professional.

Sources

• www.irs.gov