Question

Jennifer has just established and funded a roth ira. she asks you when she could first take a qualified distribution from the account. you advise her that

a) she can take a qualified distribution after attainment of age 59½ or after five years, whichever is later.
b) she can take a qualified distribution after attainment of age 59½ or after five years, whichever comes first.
c) she can take a qualified distribution after attainment of age 59½, death, disability, or for a first-time home purchase, as long as five years have elapsed since her roth ira was established.
d) she can take a qualified distribution after attainment of age 59½, death, disability, or for a first-time home purchase regardless of when the roth ira was established.

Answer 1

Advising Jennifer, she can take a qualified distribution from her Roth IRA once she is over 59½ years old, or if she is disabled or making a first-time home purchase, provided that at least five years have passed since the Roth IRA was first established.

Step-by-step explanation:

When advising Jennifer on when she can take a qualified distribution from her newly established Roth IRA, the correct answer is (c) she can take a qualified distribution after attainment of age 59½, death, disability, or for a first-time home purchase, as long as five years have elapsed since her Roth IRA was established.

Qualified distributions from a Roth IRA are tax and penalty-free withdrawals that are allowed under certain conditions. To be considered qualified, the distribution must occur at least 5 years after the initial contribution to any Roth IRA of the individual, and the individual must be at least 59½ years old, become disabled, or be using the funds for a qualified first-time home purchase. The five-year rule is particularly important because, even if one reaches the age of 59½, the individual cannot take qualified distributions unless five years have passed since the first contribution to the Roth IRA.