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2. Section 72(t) Issue
Section 72(t) provides for a 10-percent additional tax on
early distributions from qualified retirement plans. Paragraph
(1), which imposes the tax, provides in relevant part as follows:
(1) Imposition of additional tax.--If any taxpayer
receives any amount from a qualified retirement plan (as
defined in section 4974(c)), the taxpayer's tax under this
chapter for the taxable year in which such amount is
received shall be increased by an amount equal to 10 percent
of the portion of such amount which is includible in gross
income.
As relevant herein, section 4974(c) defines a qualified
employer plan as "a plan described in section 401(a) which
includes a trust exempt from tax under section 501(a)" and a plan
which the Commissioner at any time has determined to be such a
plan.
The 10-percent additional tax does not apply to certain
distributions. For example, section 72(t)(2)(A) provides that
the 10-percent additional tax does not apply to distributions
that are: (1) Made on or after the date on which the taxpayer
attains age 59-1/2; (2) made to a beneficiary (or to the estate
of the taxpayer) on or after the death of the taxpayer; (3)
attributable to the taxpayer's being disabled; or (4) made to a
taxpayer after separation from service after attainment of age
55. Petitioners do not contend that they qualify for any of the
statutory exceptions under section 72(t)(2), and indeed they do
not satisfy any of those exceptions.
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Last modified: May 25, 2011