First we need to understand what a qualified distribution is. Qualified distributions from a Roth IRA are tax and penalty free (they do not count towards your AGI). In order to be a qualified distribution, the following two requirements must be met:
1) It must occur at least five years after the Roth IRA owner established and funded his/her first Roth IRA
AND
2) At least one of the following requirements must be met:
a) The Roth IRA holder must be at least age 59.5 when the distribution occurs OR
b) Distributed assets limited to $10,000 are used towards the purchase or rebuilding of a first home for the Roth IRA holder or a qualified family member OR
c) The distribution occurs after the Roth IRA holder becomes disabled OR
d) The assets are distributed to the beneficiary of the Roth IRA holder after his/her death.
So a distribution of $10K towards a first-time home purchase (or rebuilding of a first home) would be a qualified distribution as long as the account holder had opened a Roth (any Roth) at least 5 years ago.
As I read it, a distribution of more than $10K towards a FTHP would be partially qualified (tax and penalty free) and partially nonqualified (earnings subject to tax and penalties, contributions not subject to tax or penalties).
I'm not sure how the IRS determines which portion of the distribution is contributions and which is earnings. It is probably on a pro-rated basis though.
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