In 2019, Kevin converted $8,000 from his traditional IRA to a Roth IRA. There were no nondeductible contributions made to the traditional IRA. In 2022, when the value of the Roth IRA had grown to $8,350, Kevin, then age 62, withdrew the entire balance in a nonqualified distribution. What is the tax treatment of this distribution?

The distribution is not included in income and there is no penalty.

Only the $350 in earnings is included in income, but there is no penalty on the earnings distribution.

Only the $350 in earnings is included in income and there is a 10% penalty on the earnings distribution.

None of the distribution is included in income, but there is a 10% tax penalty on the entire distribution.