What type of distribution qualifies a taxpayer to avoid additional taxes if they are a beneficiary of a deceased IRA owner?

A distribution that qualifies as a "qualified distribution" allows a taxpayer to avoid additional taxes if they are a beneficiary of a deceased IRA owner primarily because these distributions meet specific criteria set by the IRS. When an IRA owner passes away, beneficiaries can withdraw funds from the inherited IRA without incurring early withdrawal penalties, provided certain conditions are met, including the type of IRA.

Qualified distributions typically refer to those that can be withdrawn without incurring penalties, often related to Roth IRAs where earnings can be accessed tax-free after certain conditions are met. In the case of inherited IRAs, beneficiaries are afforded some tax advantages that help them avoid penalties or taxes on distributions when they follow established guidelines. This means that funds can be accessed without incurring additional taxes as long as they're properly withdrawn according to the IRS rules surrounding inherited accounts.

Other options do not provide the same tax benefits. For example, excess contribution withdrawals refer to amounts taken out above what is allowed as a contribution limit, and non-qualified distributions or taxable income withdrawals typically do incur taxes or penalties, differentiating them from qualified distributions.