is a direct rollover a qualified distribution 
yes a direct rollover of eligible assets in a qualified retirement plan is considered a qualified distribution because the assets are transferred directly into another qualified retirement plan the bottom linequalified distributions are withdrawals from qualified retirement accounts such as 401 k s 403 b s and iras to be considered qualified distributions must meet certain irs rules if withdrawals fail to meet these rules the amounts can be taxed at regular income tax rates and may face an additional 10 tax penalty for early withdrawal the irs levies taxes and penalties on unqualified distributions to discourage individuals from abusing the long term savings purpose and tax advantages of qualified retirement accounts 