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Information"; and (4) "Withholding Election". In the
"Distribution Reason" section, box number 1 was checked for
"Premature Distribution. Under 59-1/2 and no other exceptions
apply". Under "Withholding Election", the box was checked for "I
elect to have Federal income tax withheld from my IRA
distribution (10% withholding)". The amount of $2,518 is listed
in the "Payment Information" section as the amount of Federal
income tax withheld and the net distribution is listed as
$22,662.
On January 12, 1998, pursuant to the terms of the QDRO,
$17,895 was distributed from petitioner's IRA at PCB to his
former wife. At the same time, the balance of the IRA, $25,180,
was distributed to petitioner as described above. Petitioner was
not yet 59-1/2 years old at the time of the distribution.
PCB issued to petitioner a Form 1099-R, Distributions From
Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs,
Insurance Contracts, etc., showing a gross and taxable
distribution of $25,180 and Federal income tax withheld of
$2,518. Petitioner filed his Federal income tax return for 1998
in which he reported the distribution of $25,180 as income on
line 15b. Petitioner, however, deducted on line 30, "Penalty on
early withdrawal of savings", $2,518, and failed to report any
amount in the "Other Taxes" section on line 53 of his return,
"Tax on IRAs, other retirement plans, and MSAs. Attach Form 5329
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