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Zuiko asks:

<<Withdrawal of earnings are always penalized in a non-qualified distribution (right?). So when does the 5yr rule kick in? Only on qualified distributions?>>

No, they aren't always penalized as there are exceptions for taking the earnings penalty-free (but not tax-free). Using them for education expenses or as part of a "series of substantially equal payments" come to mind as examples. The five-year rule is important for taking the earnings tax-free after age 59 1/2. Even at that age, the account must have been open for five tax-years to escape taxation on earnings.

Regards..Pixy
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