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annually) made for the life (or
life expectancy) of the employee or
the joint lives (or joint life
expectancies) of such employee and
his designated beneficiary * * *
Section 72(t)(4)3 dictates, however, that if the series of
substantially equal periodic payments (which otherwise is excepted
from the 10-percent tax) is subsequently modified (other than by
reason of death or disability) within a 5-year period beginning on
the date of the first distribution, then the 10-percent tax under
3 Sec. 72(t)(4) states in part:
(4) Change in substantially equal payments.--
(A) In general.--If--
(i) paragraph (1) does not apply
to a distribution by reason of
paragraph (2)(A)(iv), and
(ii) the series of payments under
such paragraph are subsequently
modified (other than by reason of
death or disability)--
(I) before the close of
the 5-year period
beginning with the date
of the first payment and
after the employee
attains age 59-1/2, or
(II) before the employee
attains age 59-1/2,
the taxpayer's tax for the 1st taxable year in which
such modification occurs shall be increased by an
amount, determined under regulations, equal to the tax
which (but for paragraph (2)(A)(iv)) would have been
imposed, plus interest for the deferral period.
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Last modified: May 25, 2011