John and Michele McGovern - Page 8

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          Since the distribution in this case is not from an IRA, but                 
          rather from a TSP, the exception provided by section 72(t)(2)(E)            
          is inapplicable.                                                            
               Petitioners nevertheless invite us to interpret broadly the            
          exception under section 72(t)(2)(E) to include the $12,880.04               
          distribution from the TSP, citing Larotonda v. Commissioner, 89             
          T.C. 287 (1987).  In Larotonda, we concluded that the taxpayers             
          were not liable for the 10-percent premature distribution penalty           
          under former section 72(m)(5) when the IRS served a levy against            
          the taxpayers’ Keogh account for payment of an assessed                     
          deficiency and the bank trustee paid the money directly to the              
          IRS.  Former section 72(m)(5) differed from current section                 
          72(t), particularly in that the former did not include the list             
          of specific exceptions to tax set forth in section 72(t)(2).                
          Swihart v. Commissioner, T.C. Memo. 1998-407.  Moreover, unlike             
          petitioners in the present case, the taxpayers in Larotonda never           

               incompatible with the intent thereof--                                 
                        *     *     *     *     *     *     *                         
                         (37) Individual Retirement Plan.–-The term                   
                    “individual retirement plan” means--                              
                              (A) an individual retirement account                    
                         described in section 408(a), and                             
                              (B) an individual retirement annuity                    
                         described in section 408(b).                                 
          In contrast, as indicated above, sec. 7701(j)(1) refers to sec.             

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