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Internal Revenue Code of 1986

The main body of tax law in the United States, which governs how taxes are collected and what rules apply to income, deductions, and credits.

Qualified first-time homebuyer distribution

A specific type of withdrawal from a retirement account that meets certain criteria (like being used for a first home purchase) and is exempt from the usual early withdrawal tax penalty.

Taxable year

The annual period, typically a calendar year (January 1 to December 31) for most individuals, during which income is earned and taxes are calculated.

Retirement account

An investment account, such as an Individual Retirement Account (IRA), designed to help people save money for their retirement, often with tax benefits.

Early withdrawal penalty

An additional tax, usually 10%, imposed on funds taken out of a retirement account before a certain age (typically 59½), unless specific exceptions apply.