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exceptions to the 10% penalty also apply when early
distributions are made from an IRA.
* * * * * * *
Education Expenses. The 10% penalty does not
apply if the individual uses the IRA money to pay for
“qualified higher education expenses” for the
individual, the individual’s spouse, child, or
grandchild of the individual or the individual’s
spouse. Qualified expenses included [sic] tuition at a
post-secondary educational institution, books, fees,
supplies and equipment (Code Sec. 72(t)(2)(E)).
[Emphasis added.]
Therefore, in petitioners’ view, because distributions from an
IRA and a qualified plan; i.e., a 401(k) plan, are treated the
same in some instances for purposes of the 10-percent penalty and
because a distribution from an IRA that is used for higher
education expenses is exempt from the 10-percent penalty, a
distribution from a qualified plan that is used for higher
education expenses should also be exempt from the 10-percent
penalty. Moreover, according to petitioners, a one-time
distribution should cover expenses incurred over a number of
years because paragraph 2179 of the Master Tax Guide does not
state that the funds must be used in the same calendar year that
the distribution is received. As discussed below, we disagree
with petitioners’ contention.
First, it is well settled that the authoritative sources of
Federal tax law are the statutes, regulations, and judicial
decisions and not guides such as the Master Tax Guide that are
published by private commercial publishers. See, e.g., Zimmerman
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