Nonqualified Distributions and the Ordering Rules. If your distribution is not a qualified distribution, any earnings you withdraw from your Xxxx XXX will be included in your gross income for federal income tax purposes. Additionally, for each conversion or qualified rollover completed while you are younger than age 59 1/2, a separate five-year holding period will be applied solely for determining if you owe a 10 percent early-distribution penalty. The ordering rules for Xxxx IRAs determine what portion of your distribution will be subject to income and penalty taxes. The ordering rules, which take into account all of your Xxxx IRAs, state that you are deemed to take your Xxxx XXX asset types in the following order: (1) all regular or annual contributions and amounts treated as such, (2) conversion and qualified rollover contributions and amounts treated as such on a first in first out basis, and (3) your earnings. All of your assets within a certain type must be removed before you may move on to the next asset type. For each conversion or qualified rollover contribution removed, the originally taxable portion is removed first and the nontaxable portion is removed last.
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Samples: Customer Agreement, Customer Agreement, Customer Agreement
