If a superannuation account is not considered a retirement account by the IRS, then a withdrawal from it should therefore not be considered a distribution, right?

In a sense, it is not considered a distribution. But the important thing to consider is that it’s an account that has earned income. Contributions to this plan that were made post-tax have created a basis in the account; thus, your withdrawals (distribution) are not taxable. What is taxable, however, is the income that has been earned within the account, whether it be an increase from a change in market value or currency fluctuation, interest, dividend or capital gain. The problem is that these varieties of income have become almost impossible to trace, and the most conservative approach would be to include any withdrawal made beyond what you have contributed (i.e. your basis) in your ordinary income.

You can read more about the IRS’ treatment of superannuation on our blog or chat to one of our expert accountants directly!