Once an investor turns 65, however, non-qualified distributions are taxed penalty-free, just like 401(k) distributions.
Instead of following ordering rules, non-qualified distributions from designated Roth accounts generally consist of a pro-rata portion of after-tax funds (i.
Non-qualified distributions of any amount attributable to the qualified rollover are considered an investment in the contract, or recovery of basis, and not subject to early withdrawal penalties.
Withdrawals from Roth IRAs that do not meet the requirements for qualified distributions are includible in income to the extent of earnings on contributions; however, these non-qualified distributions are treated as made from contributions first and then from earnings.